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One of the nice things about Vanguard is that the fee structure is much less than 1-3% for many of their funds. I invest with them in some of their index funds

One of the nice things about Vanguard is that the fee structure is much less than 1-3% for many of their funds. I invest with them in some of their index funds and pay no more than 0.4% in fees; usually much less than that.

wiredfool 12y ago
Vanguard is owned by their funds, so incentives are aligned with the shareholders of the funds. They are very different than most fund companies.
- g_mifo 12y ago
  That's a bit of a gimmick. Management still pays themselves from the % of invested funds, not fund performance. Same issue as with a nonprofit -- the corporate profit structure is only one source of moral hazard.
  - wiredfool 12y ago
    Their expense ratios are really low. Wellington, an actively managed fund, has an expense ratio of .25%. Their non-actively managed funds, such as the Index500, are under .2%. Those are very low fees compared to other similar investments. To compare with doing it yourself, at retail trade rates, that's about one potential trade per year per $2-3k invested. Vanguard actively moves clients from their baseline funds to the lower cost/higher minimum Admiral versions. I just don't see moral hazard in Vanguard, compared to other financial firms with remotely similar capabilities and offerings.
    - wiredfool 12y ago
      Edit, but too late to actually edit -- The expense ratio of Admiral Index 500 is .05%, not .2%. So even better than I'd remembered.
zo1 12y ago
I watched a good documentary about this a while back. http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/ http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
hnnewguy 12y ago
>I invest with them in some of their index funds and pay no more than 0.4% in fees The fees for VTI, which is Vanguard's Total Stock Market Fund is 0.05%. On top of that, in Canada, most brokers will allow you to buy ETFs in a RRSP or TFSA account for no fees. Very cost efficient.

wiredfool 12y ago

Vanguard is owned by their funds, so incentives are aligned with the shareholders of the funds. They are very different than most fund companies.

g_mifo 12y ago
That's a bit of a gimmick. Management still pays themselves from the % of invested funds, not fund performance. Same issue as with a nonprofit -- the corporate profit structure is only one source of moral hazard.
- wiredfool 12y ago
  Their expense ratios are really low. Wellington, an actively managed fund, has an expense ratio of .25%. Their non-actively managed funds, such as the Index500, are under .2%. Those are very low fees compared to other similar investments. To compare with doing it yourself, at retail trade rates, that's about one potential trade per year per $2-3k invested. Vanguard actively moves clients from their baseline funds to the lower cost/higher minimum Admiral versions. I just don't see moral hazard in Vanguard, compared to other financial firms with remotely similar capabilities and offerings.
  - wiredfool 12y ago
    Edit, but too late to actually edit -- The expense ratio of Admiral Index 500 is .05%, not .2%. So even better than I'd remembered.

zo1 12y ago

I watched a good documentary about this a while back. http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/ http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

hnnewguy 12y ago

>I invest with them in some of their index funds and pay no more than 0.4% in fees The fees for VTI, which is Vanguard's Total Stock Market Fund is 0.05%. On top of that, in Canada, most brokers will allow you to buy ETFs in a RRSP or TFSA account for no fees. Very cost efficient.