In the latest instance of advisor partners cutting their costs on investment vehicles and other services, Vanguard announced Monday that it was eliminating the investment minimums on 25 of its equity and bond index mutual funds’ Signal Shares institutional-level share class. Previously, Signal Shares required a minimum investment of anywhere from $1 million to $5 million.
Among those 25 index funds with a Signal Share class is Vanguard's flagship Vanguard 500 Index fund and its Total Stock Market Index fund.
“Low expense ratios are the tangible benefit of investing with a client-owned company,” said Vanguard CEO Bill McNabb in a statement announcing the changes. “As long as the economics permit,” he said, “Vanguard will continue to seek to lower the cost of investing.”
As of Oct. 31, 2010, Vanguard’s Financial Advisor Services unit oversees $450 billion in assets, the company reported, representing more than one-quarter of Vanguard’s total U.S. fund AUM. Of those assets, $135 billion is invested in Vanguard’s 63 ETFs.
Other recent cost cuts benefiting advisors include SEI’s new initiative on fees for advisors with a low level of AUM in its network, and the ongoing price wars on ETFs (in which Vanguard is also a participant), notably TD Ameritrade’s move to offer 101 commission-free ETFs on its platform. Schwab Investor Services started that trend a year ago by launching a series of its own index ETFs that clients of Schwab Advisor Services-affiliated advisors can trade for free.
For more on the ETF price war, which includes as combatants BlackRock and State Street Global Advisors in addition to Vanguard and Schwab, please see Ron DeLegge’s Oct. 27 report on AdvisorOne.com.