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Vanguard reduces buy and sell spreads for a number of funds

Vanguard | 05 June 2013


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Vanguard today announced reductions to buy and sell spreads across 21 wholesale and retail fund offerings reflecting changing conditions in various markets, greater liquidity in the domestic bond market, reduced volatility in global fixed income markets and improved efficiencies in trade execution.

Vanguard Wholesale Funds Old Buy / Sell
Spread (%)
New Buy / Sell
Spread (%)*
 
Vanguard® Australian Fixed Interest Index Fund  0.15 / 0.15 0.10 / 0.10 
Vanguard® International Fixed Interest Index Fund (Hedged)  0.15 / 0.15 0.10 / 0.10 
Vanguard® International Credit Securities Index Fund (Hedged)  0.20 / 0.20 0.15 / 0.15 
Vanguard® Diversified Bond Index Fund  0.16 / 0.16 0.11 / 0.11 
Vanguard® International Shares Index Fund  0.20 / 0.10 0.15 / 0.10 
Vanguard® International Shares Index Fund (Hedged) - AUD Class  0.25 / 0.15 0.20 / 0.15 
Vanguard® International Shares Index Fund (Hedged) - NZD Class  0.25 / 0.15 0.20 / 0.15 
Vanguard® International Small Companies Index Fund  0.35 / 0.25 0.25 / 0.20 
Vanguard® International Small Companies Index Fund (Hedged)  0.40 / 0.30 0.30 / 0.25 
Vanguard® Emerging Markets Shares Index Fund  0.45 / 0.45 0.35 / 0.35 
Vanguard® Conservative Index Fund  0.10 / 0.08 0.08 / 0.07 
Vanguard® Balanced Index Fund  0.14 / 0.11 0.12 / 0.09 
Vanguard® Growth Index Fund  0.18 / 0.14 0.15 / 0.12 
Vanguard® High Growth Index Fund  0.19 / 0.14 0.17 / 0.13 
Vanguard Retail Funds
Vanguard® Index International Shares Fund 0.20 / 0.10 0.15 / 0.10
Vanguard® Index Hedged International Shares Fund 0.25 / 0.15 0.20 / 0.15
Vanguard® Index Diversified Bond Fund 0.16 / 0.16 0.11 / 0.11
Vanguard® LifeStrategy Conservative Fund 0.10 / 0.08 0.08 / 0.07
Vanguard®LifeStrategy Balanced Fund 0.14 / 0.11 0.12 / 0.09 
Vanguard®LifeStrategy Growth Fund 0.18 / 0.14 0.15 / 0.12
Vanguard®LifeStrategy High Growth Fund 0.19 / 0.14 0.17 / 0.13

Buy and sell spreads are necessary to recover the costs of transactional activity from investors entering or leaving the fund so that existing investors in the fund are not subsidising costs from these transactions.

Improved liquidity in the local bond market and reduced volatility in international bond markets contributed to the lowering of costs in the fixed income funds range. Reduced transaction costs and lower commissions served to reduce the spreads for the equity funds.

In the past 12 months, Vanguard has announced a number of management fee and buy and sell spread changes both to its unlisted managed funds and ETFs, and continuously seeks to find further cost efficiencies which can be passed back to benefit investors through regular reviews of its funds.

Speaking about the change, Robyn Laidlaw, Vanguard's Head of Product and Marketing said:
"As we always tell our investors, cost is the one controllable factor in investing as it is known in advance. Our goal is to ensure that our investors are always given the best opportunity for investment success and providing value through low cost is one of the ways we stay true to this promise."

These buy and sell spreads reflect the true cost of transactions in the funds and are paid into the fund to compensate for transactional activity. Vanguard does not profit from these spread costs. The spreads are subject to change and can increase or decrease depending on a range of factors.