New Vanguard Fund

[REWahoo]

For those of you who are interested, Vanguard announced the opening today of their new High Dividend Yield Index Fund. The initial expense ratio is 0.40% for Investor Shares, 0.25% for EFT shares.

 

[mickeyd]

expense ratio is 0.40%

Pretty steep for VG. When will they ever run out of new index funds to introduce?

How about this one: "The I-10 Index fund" ~Covers any business that is located within 10 miles of I-10 from Jacksonville to LA!

 

[justin]

They also have the "Vanguard Dividend Appreciation Index Fund - VDAIX" - 0.4% ER as well I think.

I guess their goal with the dividend appreciation fund is to grow the dividends over time, whereas the high yield fund has high current dividends (probably will have lots of financials and utilities?).

 

[FinanceDude]

The initial expense ratio is 0.40% for Investor Shares

.40 bp on a Vangaurd fund? Whatever happened to .18-.25??

 

[justin]

.40 bp on a Vangaurd fund? Whatever happened to .18-.25??

The assets of the fund won't be huge from inception. Therefore, they have to charge a higher ER to pay for all the expenses. As the assets grow, the ER will be lowered (if Vanguard's past actions on lowering expense ratios is any indication).

For example, the fund I mentioned, Vanguard Dividend Appreciation Index Fund, has been around for 6 months and has assets of $151 million in the mutual fund and ETF versions. At 0.28% ER for the ETF and 0.4% ER for the mutual fund, they are bringing in around $500,000 a year for management expenses. Probably a lot of that goes to pay Mergent for use of their index.

 

[jazz4cash]

When will they ever run out of new index funds to introduce?

Why would they ever run out? It's thier culture....any idea that comes along, they're gonna try to index-ize it. It seems very similar to the Wisdom Tree Dividend Weighted ETF Index (or Dogs of the Dow, for that matter), except it emphasizes income, not value.