Vanguard lowers Admiral req's

[FIREd]

Really! Now what can I brag about?

Your "flagship" status?

 

[travelover]

Your "flagship" status?

Can't even do that 'cause I'm split between Fido and Vanguard.

 

[Moemg]

I just converted five funds to Admiral . Thanks !

 

[WanderALot]

Interesting, DW has a >50K Wellington holding in her 403(b) at Vanguard and that doesn't show up as convertible. I'll have to call them up and ask about this.

This comes at a good time, since I was going to convert some my investor class funds to ETFs. Now I don't have to deal with setting up a brokerage account just to get the 10 basis point gain.

Vanguard was already pretty low cost, so I don't think this was a very expensive move for Vanguard to make to compete with Schwab/Fidelity. Worse cast, lets say you had a 99K Investor share account and converted to Admiral. Most of the Admiral funds are about 10 basis points cheaper than the Investor class. So essentially, that fund is only going to cost about $99 less per year. Nothing to sneeze at if you have a bunch of funds, but not a whole lot of money when viewed in the context of the "retention" bonus to prevent people from switching to other providers.

 

[FIREd]

Interesting, DW has a >50K Wellington holding in her 403(b) at Vanguard and that doesn't show up as convertible. I'll have to call them up and ask about this.

From Vanguard's website:

Certain retirement accounts that offer special administrative services, such as SIMPLE IRAs, 403(b)(7), individual 401(k), individual Roth 401(k), qualified profit-sharing, and money purchase pension plans, may be ineligible for Admiral Shares

 

[ikubak]

From Vanguard's website:

Looks like that applies to Education IRAs also.

 

[Ed_The_Gypsy]

Thank you! 2 of mine, too!

 

[freebird5825]

TY TY TY
I just converted 3 of my VG funds.

 

[FUEGO]

Vanguard was already pretty low cost, so I don't think this was a very expensive move for Vanguard to make to compete with Schwab/Fidelity. Worse cast, lets say you had a 99K Investor share account and converted to Admiral. Most of the Admiral funds are about 10 basis points cheaper than the Investor class. So essentially, that fund is only going to cost about $99 less per year. Nothing to sneeze at if you have a bunch of funds, but not a whole lot of money when viewed in the context of the "retention" bonus to prevent people from switching to other providers.

This is probably Vanguard making a smart move at a good time. Their expense ratios had crept up in the 2008-2009 crash. Expenses (the numerator in the expense ratio) remain relatively constant, and the fund assets (the denominator) had decreased sharply. Now, the denominator has partially recovered. They can probably rejigger the thresholds for Admiral status and not influence the ER's on the Investor class a lot versus where they were a year ago.

This move seems entirely consistent with VG trying to have fees aligned with expenses. Small accounts (under $10k) cost more to manage per dollar of AUM.

 

[TeeRuh]

And in a related VG cost cutting measure I just exercised a $2 stock transaction!!

Sweet.

t.r.

 

[BUM]

Looks like the navy suddenly has a lot more admirals - welcome aboard!

 

[FUEGO]

Looks like the navy suddenly has a lot more admirals - welcome aboard!

Now that all it takes is being a ten-thousandaire, this club doesn't feel so exclusive...

 

[TromboneAl]

This is going to confuse Quicken.

 

[Texas Proud]

OK.... just and an FYI... there is a limit of 25 funds...

Now, I was told that I had reached that limit... but they looked and that includes my taxable accounts, my Roth, and my regular IRA... I mentioned that a good number of the accounts have zero balance (just checked... 11 with zero balance) as I converted to Admiral... and also converted from regular to ROTH...

They are going to split the accounts into their components so I can get this last one done...


I also agree that the $2 trade is sweet.... as long as you do not go penny stock.... I put one in and the commission was $170... did not do it...

 

[Major Tom]

I just converted two more funds. Thanks for the tip!

 

[FUEGO]

OK.... just and an FYI... there is a limit of 25 funds...

Is that a 25 fund limit across all accounts of all types or a 25 fund limit on those you are converting to Admiral? Ie - you can't convert 26 funds to admiral in one master account?

 

[FUEGO]

This is going to confuse Quicken.

That was my thought exactly.

Any takes on how this will affect tax lots? I had some losses on a lot of tax lots before, but now the shares in the new Admiral funds don't correspond 1:1 to the old shares of the investor class. By this I mean that I had, for example, 3000 shares of Pacific fund Investor Class and those were exchanged into 400 shares of Pacific Fund Admiral Class.

My question is can I still designate specific tax lots to sell to generate capital losses. How? Allocate the cost basis of each original tax lot of investor shares to a tax lot of the Admiral shares? In other words, those 50 shares of the Investor class are now the same cost basis as 6.667 shares of Admiral class?

I may have lost out big time on tax loss harvesting potential if I can't designate specific lots now.

 

[REWahoo]

That was my thought exactly.

Any takes on how this will affect tax lots? I had some losses on a lot of tax lots before, but now the shares in the new Admiral funds don't correspond 1:1 to the old shares of the investor class. By this I mean that I had, for example, 3000 shares of Pacific fund Investor Class and those were exchanged into 400 shares of Pacific Fund Admiral Class.

My question is can I still designate specific tax lots to sell to generate capital losses. How? Allocate the cost basis of each original tax lot of investor shares to a tax lot of the Admiral shares? In other words, those 50 shares of the Investor class are now the same cost basis as 6.667 shares of Admiral class?

I may have lost out big time on tax loss harvesting potential if I can't designate specific lots now.

From the Vanguard announcement:

All cost-basis information from your Investor Shares will be transferred to your Admiral Shares automatically.

 

[FUEGO]

From the Vanguard announcement:

Thanks! The Vanguard statement still doesn't fully answer my question as to whether or how I can carry over the initial tax basis for tax lots. Right now Vanguard lists "various" as the dates of acquisition for all the lots of my funds.

But while reading Vanguard's tax basis accounting information, I noticed that as part of being required to report cost basis info to the IRS, Vanguard is improving their cost basis tracking on their website. They have stated that investors will be able to designate specific lots of mutual funds for sale starting in late 2010.

To assist you with these new reporting requirements, we will offer an enhanced cost basis service so you can choose a method suited for your financial situation. This will include the ability to identify specific shares. These services will be available later this year.

from:
http://personal.vanguard.com/us/whatweoffer/stocksbondscds/costbasisaccounting

I have to say, this is great news for my continued relationship with Vanguard. I have done tax loss harvesting exactly once with them. And while not a pain, it wasn't easy since I had to write a letter to explain what I was doing. And wait a few days for the trades to be made.

 

[Texas Proud]

Is that a 25 fund limit across all accounts of all types or a 25 fund limit on those you are converting to Admiral? Ie - you can't convert 26 funds to admiral in one master account?

25 funds in an account type... (regular, ROTH, IRA) the problem with me was they lumped all my types together (all accounts linked)..

If you had 13 funds and tried to convert all 13 to Admiral, you would not get to convert that last one without calling them... even though you had 12 funds with ZERO $$$$s....

 

[FUEGO]

25 funds in an account type... (regular, ROTH, IRA) the problem with me was they lumped all my types together (all accounts linked)..

If you had 13 funds and tried to convert all 13 to Admiral, you would not get to convert that last one without calling them... even though you had 12 funds with ZERO $$$$s....

Gotcha. I'm "only" at 19 including a few zero balance funds. I guess I'll have an issue if I add another 7 funds...

 

[mickeyd]

Good news. I still have a few funds @ VG that are under $100k that will be joining us at the adults table soon.

Does anyone dispute that this action is in response to Fido's Spartan low ball ER action? Gotta love competition...

 

[kramer]

I would advise making sure all of your cost basis information is complete, correct, and entered in before 2011. (Actually, due to the new law, I would advise this for all your holdings, not just Vanguard)

I am actually doing this right now, paying for the fact that Vanguard did not used to track this.

My most difficult one (which I did a couple of year ago), involved the following:

Invested in Emerging Markets mutual fund steadily over a decade
At the beginning reinvested dividends until I knew better
Converted to Admiral class (which has different pricing, share structure)
Converted Admiral class to ETF

Vanguard did not used to provide any cost basis assistance for this and you need to hand enter each tax lot. In fact, I am figuring the same right now for the European and Pacific funds that I have owned for a decade and converted to ETFs in 2008. Last night I entered the information for Vanguard Tax Managed foreign converted to ETF. And for some of these funds, after conversion, there is no electronic history at Vanguard (which I find unbelievable). I have 10 years of paperwork on my desk right now and am almost finished.

Then you need to call them to set how you want your shares sold if you do not want FIFO when selling (brokerage, which is different from your mutual fund setting). You can't do this on the web (as of a month ago). I have mine sent to HIFO. (highest in, first out)

And before this announcement, anything other than FIFO selling for mutual funds was not possible without a phone call each time you want to sell (confirmed this summer via both Vanguard communication and Bogleheads). Maybe that has changed now.

Kramer

 

[Nords]

... paying for the fact that Vanguard did not used to track this.
Vanguard did not used to provide any cost basis assistance for this and you need to hand enter each tax lot.
And for some of these funds, after conversion, there is no electronic history at Vanguard (which I find unbelievable).
Then you need to call them to set how you want your shares sold if you do not want FIFO when selling (brokerage, which is different from your mutual fund setting). You can't do this on the web (as of a month ago).
And before this announcement, anything other than FIFO selling for mutual funds was not possible without a phone call each time you want to sell (confirmed this summer via both Vanguard communication and Bogleheads). Maybe that has changed now.

But other than that, holy cow are their expense ratios cheap!!

 

[photoguy]

I would advise making sure all of your cost basis information is complete, correct, and entered in before 2011. (Actually, due to the new law, I would advise this for all your holdings, not just Vanguard)

I went to my account and it looks like I can only enter this information in for brokerage accounts. Is there anyway to record it for mutual funds?