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Vanguard does reduce the fee in many of its funds as the investment amount becomes larger. The tiers are Investor, Admiral, Institutional, and Institutional Plu
by srj 11y ago
Vanguard does reduce the fee in many of its funds as the investment amount becomes larger. The tiers are Investor, Admiral, Institutional, and Institutional Plus. Some of these you can get in a 401k plan negotiated by your employer. VIIIX for example is an S&P fund with a 0.02% expense ratio.
- mooreds 11y agoYes, I know about this. I realized after posting the comment that the way to get a fixed price index fund (where the fee is not tied to the asset size) is just to buy stocks directly. Once you pay the one time commission, you own the stock forever with no yearly management fee. Of course, that comes with other costs (you have to adjust yourself when the index changes, commission when you sell, etc).
- srj 11y agoWhich index? If it's an S&P500 one that's 500 stocks to buy. What happens when companies enter the S&P500 or exit it? You would need to trade again which means more commission fees. What if one company in the index grows considerably while another one falls in value? Do you rebalance between those two? More commissions. Index funds hide all of this and I would guess it winds up cheaper particularly if you include effort.