If you own shares of the Vanguard Total International Stock Index mutual fund, you may be interested to know that Vanguard recently announced that Admiral shares of the fund now available to those with balances of $10,000 or more. Here are their respective pages:
Admirals shares are a separate share class in addition to the standard Investor shares. While owning the same underlying investments, they take advantage of the cost savings of larger accounts and thus have lower annual expense ratios. Back in October, Vanguard reduced the minimum amount required to qualify for Admiral Shares on most of their index funds from $100,000 to $10,000.
Vanguard Total International Stock Index Investor shares have an annual expense ratio of 0.32%, while the Admiral shares are at 0.20%. That’s a difference of only $12 annually per $10,000 invested, but with compounding over time that can become significant. If you qualify, Vanguard says they will convert you automatically sometime “early next year”, but you can do so manually right now with a few clicks. Here’s a step-by-step guide [pdf], so why not?
After the conversion, you will remain invested in the same Vanguard fund. We’ll transfer your account options and cost-basis information to your new Admiral Shares automatically. When the change is complete, we’ll send you a confirmation of the transaction. We’ll also send you a separate confirmation for any account options that we carried over to your new Admiral Shares.
Also worth mentioning again is the fact that the Total International Stock Index Fund itself is making some changes soon. Its benchmark index will switch to the MSCI All Country World ex USA Investable Market Index, which differs from the previous index by adding exposure to Canada and Israel, as well as adding a ~13% allocation to small-cap international companies.
The combination of the benchmark change and this new Admiral shares option, in my opinion, makes the holdings more comprehensive and even cheaper than my current holdings of the Vanguard FTSE All-World ex-US ETF (VEU). I’m going to direct all my new investments into VGTSX/VTIAX. I’m not selling my existing shares of VEU right away though, as I already have some capital gains. I suppose that’s a good thing.
By Jonathan Ping | Investing | 12/9/10, 2:17am