As Vanguard retail funds are now closed to new investors, there is a risk that over time these funds may no longer be economically viable to operate and could result in increased fees or termination of the funds. This proposal gives you the opportunity to participate in a one-time transaction to transition to our larger wholesale funds without triggering a capital gain.
What do you think? Is this a good thing for investors?
The history that seems to be missing a bit from the Vanguard statements is that around 2020 the retail funds were closed to new investors, but they made changes to basically align the wholesale funds and retail funds. They dropped the management fees to the same level for both, and the wholesale fund doesn’t seem to have large initial funding/additional investment requirements. So previously the retail fund was something quite different – smaller initial requirements, easy bpay investments, but also higher fees. The only difference now seems to be that the funds distribute quarterly, instead of twice a year. So all in all, this seems like a good way to get into the wholesale fund without tax implications.
I heard it changes the custodian of the portfolio. Currently we are custodians, but this would change it so Vanguard are custodians. So if Vanguard Australia goes out of business, you might not get your money back. It might be unlikely they’ll go out of business, but still a consideration.
