Author Topic: $100,000 minimum Vanguard fund  (Read 7945 times)

Bartleby_the_Scrivener

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$100,000 minimum Vanguard fund
« on: October 25, 2016, 08:45:39 PM »
I was looking into purchasing another fund to add to my portfolio, and I happened across VCSAX. It's focused on consumer staples.

What caught my attention was the fact that the fund minimum was $100,000. Is that a typo? I haven't seen a fund with that sort of minimum among Vanguard's other offerings. VCSAX isn't even listed in the mutual fund list: https://investor.vanguard.com/mutual-funds/list#/mutual-funds/asset-class/month-end-returns

terran

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Re: $100,000 minimum Vanguard fund
« Reply #1 on: October 25, 2016, 08:52:18 PM »
Check out their institutional class funds: https://personal.vanguard.com/us/funds/snapshot?FundId=0855&FundIntExt=INT#tab=3 -- $5,000,000 minimum.

Bartleby_the_Scrivener

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Re: $100,000 minimum Vanguard fund
« Reply #2 on: October 26, 2016, 06:05:43 PM »
Yeah that is very high, but it is for admiral shares with 0.1% fees.  For a smaller fund (not huge like their mainstream index funds) that's really good.  You can always buy the equivalent ETF that seems to be identical (VDC.IV) with no minimums.

Yeah, I just know some of the other Admiral shares have a $10,000 minimum, which is much more reasonable.

I'll have to look at the ETF. I'm not near the $100k minimum for a single fund.

Vagabond76

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Re: $100,000 minimum Vanguard fund
« Reply #3 on: October 26, 2016, 06:39:44 PM »
Several Vanguard Admiral funds have a $50,000 minimum.  I invested in the Long-term Investment-grade fund, with a $50,000 minimum (also qualified me for Voyager status) years ago.  It wasn't until I started reading this forum did I know that Vanguard offered Admiral funds with a $10,000 minimum.

Indexer

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Re: $100,000 minimum Vanguard fund
« Reply #4 on: October 26, 2016, 06:49:06 PM »
Many of the sector funds have 100k minimums OR you can just buy the ETF.

As a general rule:
Index funds admiral shares: 10k (or buy ETF)
Active funds admiral shares: 50k

Sector funds: 100k  (or buy ETF)

Institutional:  Millions, but these are meant for 401(k) plans where they can get group pricing.

MustacheAndaHalf

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Re: $100,000 minimum Vanguard fund
« Reply #5 on: October 26, 2016, 07:47:02 PM »
I kinda think John Bogle wouldn't approve of this one...

Vanguard Market Neutral Fund Investor Shares (VMNFX)
"investor class" with a $250,000 minimum investment
https://personal.vanguard.com/us/funds/snapshot?FundId=0634&FundIntExt=INT

And the expense ratio... 1.46%, including "dividend expenses on securities sold short  1.06%".
See page 1 of the prospectus to verify the highest expense ratio I've seen at Vanguard.  But also,
one that is out of reach of any investor with under $250k.  Neat way to ensure only qualified investors!

Bartleby_the_Scrivener

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Re: $100,000 minimum Vanguard fund
« Reply #6 on: October 26, 2016, 08:08:39 PM »
The ETFs are pretty awesome considering the 10 year returns I looked at are only 0.02% less than the 100k minimums on the equivalent mutual fund.

From what it looks like, VDC (the consumer staples ETF) isn't available inside of an IRA, though.

seattlecyclone

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Re: $100,000 minimum Vanguard fund
« Reply #7 on: October 26, 2016, 08:15:41 PM »
The ETFs are pretty awesome considering the 10 year returns I looked at are only 0.02% less than the 100k minimums on the equivalent mutual fund.

From what it looks like, VDC (the consumer staples ETF) isn't available inside of an IRA, though.

Where are you seeing that? I was under the impression that you could purchase any publicly traded stock or ETF in a Vanguard IRA.

And the reason you're not seeing the Admiral shares in the list you posted in the original post is because the default "filter" options only show funds with a minimum of $25,000 or less. Click the "Filter" button, tick the box to show funds with a $50,000 minimum or higher and VCSAX shows right up.

Vagabond76

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Re: $100,000 minimum Vanguard fund
« Reply #8 on: October 27, 2016, 04:31:33 AM »
I kinda think John Bogle wouldn't approve of this one...

Vanguard Market Neutral Fund Investor Shares (VMNFX)
"investor class" with a $250,000 minimum investment
https://personal.vanguard.com/us/funds/snapshot?FundId=0634&FundIntExt=INT

And the expense ratio... 1.46%, including "dividend expenses on securities sold short  1.06%".
See page 1 of the prospectus to verify the highest expense ratio I've seen at Vanguard.  But also,
one that is out of reach of any investor with under $250k.  Neat way to ensure only qualified investors!

This fund has been around for many years.  It started right after Bogle stepped down.

The expense ratio is high because it has to include all underlying expenses, including interest paid on leverage and, as you said, dividends paid on shares held short. These are expenses that any investor would have to pay if they took out margin loans or held dividend paying stocks short.

The Vanguard website says that the fee, excluding these expenses, is .25%, which is in line with other investor-class funds. The high minimum investment is meant to filter out people who don't understand the strategy.

Margin loan interest is why many funds have high expense ratios. The expenses aren't always going to the company's pockets. Often the company turns around and pays insurance companies, hedge funds, venture capitalists, and pension funds for the use of capital.  What goes into an expense ratio is rarely, if ever, articulated in here.

Funds often use leverage to amplify the yield and/or short-term gains. Whether these atrategies lead to long term value against an index is certainly open to debate.

Bartleby_the_Scrivener

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Re: $100,000 minimum Vanguard fund
« Reply #9 on: October 27, 2016, 06:48:08 PM »
Also check if you can see VTI (ETF for VTSAX).  If you can't see it inside your IRA then your IRA is not set up as a brokerage account.  There's some upgrade button you need to click to convert it to a trading account.

Sure can't see that one either. I went to buy Vanguard funds, and I only see mutual funds. I thought that I could hold pretty much any stock, bond, ETF, etc. in the IRA there. Guess I'll have to give Vanguard a call and see what's up.

Bartleby_the_Scrivener

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Re: $100,000 minimum Vanguard fund
« Reply #10 on: October 27, 2016, 06:57:12 PM »
If you can't see it inside your IRA then your IRA is not set up as a brokerage account.

You're right. That explains it.

Frugalman19

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Re: $100,000 minimum Vanguard fund
« Reply #11 on: October 28, 2016, 08:09:52 AM »
These are institutional shares, its for advisors and 401(k)s and such. If you had an advisor somewhere that invested you into vanguard funds they would use this share class.