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Vanguard Moves to Simply, Drop Charges

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It’s spring-cleaning time for fees at Vanguard. This month, the fund giant will charge clients a flat $20 yearly fee on accounts with balances under $10,000 — except if the accounts are being managed electronically.

Customers can invest with Vanguard and pay no such fee if they access their accounts at and receive all documents via e-mail, have a total balance in Vanguard funds of $100,000 and up, or keep all account balances at $10,000 and above.

“We are pleased to simplify our fees and provide the opportunity to our shareholders to pay no fees beyond our low fund expense ratios,” said Vanguard CEO John J. Brennan. “Vanguard shareholders are self-motivated, cost-conscious investors who, we believe, will take advantage of the fee-free options in large numbers.”

Vanguard says that more than 80 percent of client interactions — from transactions to address changes — occur online. Clients who sign up for e-delivery can still call the company for fund information and account service if needed. “Greater web usage also brings the potential to reduce printing, postage, and service costs, and the resulting savings can be passed along to all shareholders in the form of lower Vanguard fund expense ratios,” Brennan explains.

Vanguard says its expense ratio is about 0.21 percent on a $5,000 account vs. the 2006 industry average of 1.27 percent, according to Lipper. The company says that clients who decide not to use its new fee-free options should expect “all-in” costs (expense ratio plus the account-service fee) of $30.50, roughly half the comparable cost of the average mutual fund.

Janet Levaux is the managing editor of Research; reach her at [email protected].


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