Comments on: What is Considered a Low Cost Index Fund?

By: Healthcare Economist

Healthcare Economist — Thu, 06 Nov 2008 16:32:24 +0000

Almost all Vanguard funds do not have loads (purchasing or selling fees that go to the company). However some index funds such as the Emerging Markets Index Fund have a 0.25% purchase and redemption fee. This fee, however, is not collected by the company, but goes back into the fund. The purpose is to discourage short term buying and selling.

So, if you are a short term investor, you can think of this fee as a load. If you are a long term investor, however, you will still pay the fee, but you will earn it back since other investors will also be paying these fees into the fund.

By: Shadox

Shadox — Sun, 04 Nov 2007 03:21:27 +0000

Guys, the expense ratio covers actual expenses, but also the fund’s profit. How else would they make money? 0.18% per year is completely reasonable for the service consumers receive and the responsibility fund managers bear.

By: MoneyNing

MoneyNing — Mon, 15 Oct 2007 21:11:33 +0000

Jon: Actually, even though they have 128 billion in their fund, that is only a small portion of what the total market is. So the fund needs to sell and buy based what the total market does so that’s where the expenses are.

By: Jon

Jon — Mon, 15 Oct 2007 20:20:55 +0000

Maybe it’s just me, but I don’t get why index funds have expense ratios at all.

The Vanguard 500 Index has $128 billion in assets and an expense ratio of 0.18%. Great huh? No! That means they’re spending over $230 million a year! And all they do is follow an index that somebody else put together. It’s a shame because I could do the same thing for just 0.09% Give me a call Vanguard.