Vanguard Funds - Investor's Vote to Swap from Retail Funds to Wholesale Funds (Discussion)

tekisei on 13/07/2023 - 19:09
Last edited 13/07/2023 - 19:18

Hi all,

I got an email from Vanguard yesterday about a investor's vote to shift all invested units from Retail Funds to Wholesale Funds (with access via Vanguard Personal Investor website), due to the Retail Funds closing down and gradual attrition of its customer base - eventually financially not viable for Vanguard to operate.

E.g. units in VAN0010AU (retail) will be swapped to units in VAN0002AU (wholesale), without a CGT event.

Seems that fees and returns are all the same, but downsides include not being able to BPay funds directly into the fund, and also that Wholesale units are held by Vanguard as the trustee with the investor as the beneficiary (I don't actually know if this is a change from the current Retail Fund structure, but I'm assuming this is equivalent to going to a non-CHESS structure for shares).

With my minuscule voting power I doubt that there would be any difference to the result, but would still like to know everyone else's thoughts.

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Comments

  • SBOB on 13/07/2023 - 19:16
    +2

    got the same.
    I guess the against option is if they dont pass this when they want to, with the CGT free transfer across proposed, if they decide to just wind up the retail funds in the future and give you no option but to sell it could be inconvenient/costly.

  • ihbh on 13/07/2023 - 19:23

    For other wholesale funds where you need at least 500k, the fees are cheaper than the retail option. So going from retail to wholesale is a positive (just check mgt fees are same or lower).

  • Gdsamp on 13/07/2023 - 19:39

    Very bullish signal.

  • TurboTortoise on 13/07/2023 - 19:47

    Are you sure the management fees reduce to the wholesale fee level or does the letter say the fees will stay the same? (I think the wholesale fees are lower than the current retail fees?)

    "There are no additional fees. You will continue to pay the same fees as you do today. "

  • scotty on 13/07/2023 - 20:04

    I think all managed funds (retail or wholesale) are held by the fund manager as trustee. You need to go with ETF (VAS in this case) with a broker to be registered on CHESS.

  • Specialist Diaz on 13/07/2023 - 20:17

    Got the same, but as a Wholesale Fund investor, so the move is just to the Investor platform. I voted against, and opted out.

    • ragrum on 13/07/2023 - 23:38

      What are the disadvantages of the change?

      • Specialist Diaz on 14/07/2023 - 07:34
        +2

        Fund holders currently have legal and beneficial ownership of their investments. Under the proposal, Vanguard will take legal title to the investments. This means a loss of rights enshrined in the Corporations Act such as withdrawal, transfer and voting rights. Doesn't matter 99% of the time, until one day it does.

        Won't be able to invest/withdraw directly in the funds anymore. Would have to fund a Vanguard Cash Account, which does not pay interest, and then transact. Not paying interest is effectively a ~4.5% fee on the cash account.

        Likewise with receiving distributions. Currently Personal Investor pays distributions to the Cash Account and does not have the ability to pay distributions directly to your bank account. They say they're going to add it, but that's just a promise.

        Potential for Vanguard to add whatever fees they want to Personal Investor platform, whenever they like. It had a 0.20% account fee on all assets when it first came out.

        Vanguard are going to charge our investments to pay for this change.

      • Specialist Diaz on 14/07/2023 - 16:09
        +1

        I should clarify: my comments were about the Wholesale Fund proposal, which just gives Vanguard legal ownership and moves us to their platform.

        The Retail Fund proposal also includes switching to the Wholesale Funds. So I would vote for it, to avoid any fee changes or CGT shenanigans as the Retail Funds shrink away.

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