Expanded access to Admiral Shares - Vanguard

Expanded access to Admiral Shares

Rebecca Katz: Hi. I'm Rebecca Katz of Vanguard's Institutional Investor Group and I'm here today with Sean Hagerty, head of Vanguard Portfolio Review. We will be talking about Vanguard's recent decision to expand access to AdmiralTM Shares for a wide range of investors and to phase out the Signal? share class. Sean's team is in charge of monitoring the Vanguard funds and managers and is focused on continually improving our fund lineup. Welcome, Sean.

Sean Hagerty: Thanks, Rebecca.

Rebecca Katz: So Sean, why don't we start with a brief overview of the recent announcement affecting Signal Shares and Admiral Shares?

Sean Hagerty: Sure. Well first, we're pleased to announce that we're going to be increasing access to Admiral Shares, a low-cost share class that we offer to investors. In addition to that, we're going to be eliminating the minimum investment requirement for the institutional and financial advisor clients who access Admiral Shares. And finally, we're going to be phasing out the Signal share class from Vanguard funds.

Rebecca Katz: So how long has Vanguard offered Admiral and Signal Shares?

Sean Hagerty: Admiral Shares have been around for a while. We've offered them since 2000. Signal Shares came along a little bit later. We've been offering them since 2006.

Rebecca Katz: And why did we introduce the Signal class?

Sean Hagerty: We wanted to offer a distinct share class for financial advisors and institutional investors. However, over time we found that really there was no distinction-- that the price was the same--and it made sense for us to simplify the lineup and to offer Admiral share classes to a wider group of investors.

Rebecca Katz: I see. So what impact will these changes likely have on investors?

Sean Hagerty: I think if you're an existing investor, what you need to know is there's no change in the underlying investments. This is a mutual fund with multiple share classes and the investments don't change at all. In addition to that, there's no change in the expense ratio because historically, Admiral share class and the Signal share class have had identical expense ratios.

Rebecca Katz: So if I own Signal Shares today is there something special that I need to know?

Meet the speakers

Rebecca Katz Principal, Vanguard Institutional Investor Group

Sean Hagerty Principal, Vanguard Portfolio Review Department

Sean Hagerty: Yeah, I think that if you own them today what you need to know is that any time after the announcement, you can convert them into Admiral share class. So the Signal Shares can convert into the Admiral share class at any time. In addition to that, if you're not ready to do the conversion yet, you can make additional purchases into the Signal share class. And you can do that up until October 2014 at the point that we'll convert all of the Signal share classes into the Admiral share classes.

In the event that you do a conversion, by the way, it's a nontaxable event so it really shouldn't have an impact on the portfolio beyond just the change in share class.

You know, the bottom line is when this process is complete we're going to be offering a low-cost share class of Admiral Shares to a wider group of investors.

Rebecca Katz: That's great. So if I am an institutional investor or an advisor and I have more questions, what's the best route?

Sean Hagerty: The best route is probably to call your relationship manager to handle any things that are specific to your particular situation or to go to to look for information about the conversion there too.

Rebecca Katz: Great, well it sounds like a good news story. Thanks for being here, Sean.

Sean Hagerty: Thanks, Rebecca.

Rebecca Katz: And thanks to all of you for tuning in.

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