Author Topic: Orwellian Vanguard fund expense notices?  (Read 2685 times)

sheepstache

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Orwellian Vanguard fund expense notices?
« on: April 28, 2015, 09:44:22 AM »
You know how in 1984 the TV announces that chocolate prices have gone from $4 to $5 and everyone patriotically accepts this but then the very next week they announce that the price of chocolate has fallen to $5 due to the victory and generosity of the fatherland, etc., etc., and everyone celebrates as though they think the price has actually gone down.

I keep thinking something like that is happening when I sign into my Vanguard account and it announces that some of my funds' expense ratios have gone down and I could swear they're the same. Today it says Vanguard Total Stock Market Index Fund Admiral Shares have fallen from .06 to .05. But, I swear it's been .05 the whole time I've owned it. And according to this chart it's been .05 for 4 years. http://www.bogleheads.org/wiki/Vanguard_Total_Stock_Market_Index_Fund_expenses

What's going on? Did the ER temporarily tick up and they just didn't have an announcement of it?

skyrefuge

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Re: Orwellian Vanguard fund expense notices?
« Reply #1 on: April 28, 2015, 10:31:21 AM »
As far as I know, Vanguard only updates the ERs when they update the fund's prospectus, which happens on a yearly basis. And April 28, 2014's prospectus shows VTSAX with a 0.05% ER, so your memory is correct.

I've never actually seen a note inside my account informing me of an ER change, though I've never gone to look either. But I just checked my account, and I have a note for VFIAX showing an even crazier change: 0.09% to 0.05%. Like your case, I know VFIAX has been at 0.05% for a long time.

So I'm guessing it's just some kind of bug in their platform (though maybe that's what they want me to think!)

Every month they publish a "news" article showing funds with updated prospectuses, and which of those (if any) have had their ERs change. It doesn't appear yet that they've published the April 2015 version of this article; perhaps that will explain it.

Regarding 1984, my Google Maps Navigation just did this. I was driving somewhere and it sensibly had me on a route that used an expressway. Then, suddenly (and without explicitly informing me), it changed my route to use surface streets only. I thought "huh, a really bad accident must have just happened on the expressway and Google knows I should avoid it; that's the only way this surface-street route will be faster than the expressway". Then a few minutes later, she spoke up and said "new route found, it will save 10 minutes over the current route. Would you like to take it?" Oh Google, you're so smart, you've just saved me 10 minutes! What would I do without you?! (of course she had just flipped back to the original expressway route).

brooklynguy

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Re: Orwellian Vanguard fund expense notices?
« Reply #2 on: April 28, 2015, 11:24:49 AM »
Are these notices in your accounts dated?  Maybe you guys just haven't read any of your notices in the last several years?

Some quick googling indicates that VTSAX had an expense ratio of 0.06% as recently as 2010 (but I haven't been able to trace the history of VFIAX far back enough to find an expense ratio of 0.09%).

WAR IS PEACE.  FREEDOM IS SLAVERY.  IGNORANCE IS STRENGTH.  HIGH-COST IS LOW-COST.

skyrefuge

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Re: Orwellian Vanguard fund expense notices?
« Reply #3 on: April 28, 2015, 01:08:56 PM »
Are these notices in your accounts dated?  Maybe you guys just haven't read any of your notices in the last several years?

I believe it was dated 04/28/2015 (which is also the date the prospectuses were updated). It was just a line that appeared above my VFIAX holding on my "Balances and holdings" page.

I just checked again, and the notice is no longer there. So that makes it pretty likely that it was just a bug, they found it, and fixed it.

For reference, here is the ER-change update for these funds from last April, showing them both at 0.05%, and unchanged from the year earlier:

https://personal.vanguard.com/us/insights/article/expense-ratio-changes-042014

I'm assuming when we get this year's report in a day or two, it will show the same 0.05% for the 2014 and 2015 ERs.

brooklynguy

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Re: Orwellian Vanguard fund expense notices?
« Reply #4 on: April 28, 2015, 02:36:51 PM »
So that makes it pretty likely that it was just a bug, they found it, and fixed it.

Yup, that makes sense.  A Vanguard-as-Big-Brother Orwellian conspiracy theory explanation would have been more fun, but bad for us Vanguard investors, I guess.