Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Vanguard Targets Arbitrageurs with Extra Fee Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, April 25, 2003

Vanguard Targets Arbitrageurs with Extra Fee

by: Sean Hanna, Editor in Chief

Vanguard is taking aim at arbitrageurs who try to take advantage of pricing discrepancies in its international funds. Rather than adopt special valuation methodologies or throw investors or advisors out of the funds -- both strategies adopted at some other complexes -- Vanguard is taking a rather more straightforward approach: it is making them pay.

On June 27, the Valley Forge, Pennsylvania-based fund firm is adding a 2 percent redemption fee on sales of shares in nine funds that investors hold for less than two months. For the past sixteen months Vanguard has tried a less stringent measure to curb arbitrage in its international funds. Since January, 2002 it has limited shareholders to two telephone or online exchanges out of a fund within a rolling 12-month period, and cut off telephone and online exchanges of fund shares after 2:30 PM Eastern time.

Vanguard officials said that those policies did help and that they will stay it place, but added that the funds' Board of Trustees believed that a more stringent policy was needed.

"We believe that a short-term redemption fee will serve as an effective means of ending this adverse trading activity. Our primary concern is to protect the interests of our long-term shareholders, by ensuring that fund returns are not eroded by the exploitive actions of a few shareholders," explained Gus Sauter, managing director-Vanguard Quantitative Equity Group.

Sauter took pains, though, to clarify that Vanguard is not adding the fee to boost its revenues. "This is a redemption fee, however, we hope to never collect," he added.

The funds for which the fees will be added include:

  • Vanguard International Growth
  • Vanguard International Value
  • Vanguard International Explorer
  • Vanguard Total International Stock Index Fund
  • Vanguard European Stock Index Fund
  • Vanguard Pacific Stock Index Fund
  • Vanguard Developed Markets Index Fund
  • Vanguard Institutional Developed Markets Index Fund
  • Vanguard Emerging Markets Stock Index Fund  

    Stay ahead of the news ... Sign up for our email alerts now
    CLICK HERE

  • 0.0
     Do You Recommend This Story?



    GO TO: MFWire
    Return to Top
     News Archives
    2019: Q3Q2Q1
    2018: Q4Q3Q2Q1
    2017: Q4Q3Q2Q1
    2016: Q4Q3Q2Q1
    2015: Q4Q3Q2Q1
    2014: Q4Q3Q2Q1
    2013: Q4Q3Q2Q1
    2012: Q4Q3Q2Q1
    2011: Q4Q3Q2Q1
    2010: Q4Q3Q2Q1
    2009: Q4Q3Q2Q1
    2008: Q4Q3Q2Q1
    2007: Q4Q3Q2Q1
    2006: Q4Q3Q2Q1
    2005: Q4Q3Q2Q1
    2004: Q4Q3Q2Q1
    2003: Q4Q3Q2Q1
    2002: Q4Q3Q2Q1
     Subscribe via RSS:
    Raw XML
    Add to My Yahoo!
    follow us in feedly




    ©All rights reserved to InvestmentWires, Inc. 1997-2019
    14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
    Privacy Policy :: Terms of Use