Vanguard Lowers Minimums, Cuts Fees for 2 Million Clients


Mutual fund powerhouse Vanguard reduced the cost of investing Wednesday by lowering the minimum investment requirements for its low-cost Admiral Shares. The company said the lower investment minimums mean 2 million of its clients will pay lower expenses for 52 of its funds.

Account balance minimums for 17 stock and bond index funds have been lowered to $10,000 from $100,000 and minimums for 35 actively managed stock and bond funds have been lowered to $50,000 from $100,000. Investors will now pay about seven cents for each of the lower-priced Admiral Shares instead of about 18 cents for each Vanguard Investor share. Vanguard will automatically convert client accounts to Admiral Shares over the next few months.

"Expanding the availability of Admiral Shares to a greater number of Vanguard clients represents another step in our ongoing efforts to lower the cost of investing," said Vanguard chairman and CEO Bill McNabb in a statement.

Vanguard recently surpassed Fidelity Investments as the largest mutual fund company by assets, and this move appears designed to help it maintain its lead. Mutual fund tracker Morningstar says Vanguard clients will see immediate savings from the change and the company may attract new investors because of the cost savings they could enjoy from rolling over 401(k)s or shifting other investment accounts to Vanguard. For investors, paying less in fees means more in total returns.