Vanguard introducing loads on 2 funds in 2017?


Vanguard is getting ready to ring in 2017 with stealth fees on two newer funds.

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An about-face for Vanguard?

The discount investment house has a long history of keeping expenses low for its customers. But in a surprise move, Barron’s magazine reports Vanguard will slap a commission (i.e. a ‘load’) on investors both coming into and leaving two particular funds.

Beginning February 2017, investors in Vanguard’s International Dividend Appreciation Index (VIGI) and International High Dividend Yield Index (VYMI) will face two new fees — a 0.25% front-end load and a 0.25% back-end load.

Fund watcher Daniel Wiener notes in his newsletter, The Independent Adviser for Vanguard Investors, that a possible reason for the load is that there hasn’t been enough inflow of cash into these funds since their formation in February 2016. Investors are generally wary of foreign funds, particularly in today’s economic climate.

Vanguard, meanwhile, hesitates to label as loads these new fees.

‘The purchase and redemption fees are not commissions or ‘loads,” the company said in a statement. ‘The fees are paid directly to the fund to offset the generally higher transaction costs associated with buying international securities.’

That said, Vanguard is still one of the lowest-cost places you can invest your money.

At Vanguard, they’ve managed to offer better returns on money because everything they do is to hold down expenses. They charge one-sixth the management expenses of the industry average. That means paying 18 cents in management fees per $100 invested in Vanguard products vs. paying $1.23 for the same $100 invested in competitor’s actively managed funds, according to independent investment research firm Morningstar.

If you like using fee-only financial planners as Clark has talked about, many of them will heavily do your investing with Vanguard to hold your costs down. It makes them look better because your performance over time with their guidance will be a whole lot better!


And in case you’re wondering, Clark’s other favorite low-cost investment houses include Fidelity, T. Rowe Price and Charles Schwab.  

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