Retirement Plan Fees on Vanguard Funds Reduced
Vanguard lowered investment fees for a wide range of share classes and funds, including three options available in the University of Colorado 401(a) Manadtory Retirement Plan, 403(b) Voluntary Retirement Plan and the Student Employee Retirement Plan, effective Feb. 1.
Investment fees in Vanguard’s FTSE Social Index Institutional (ticker: VFTNX), Total Bond Market Index Institutional (ticker: VBTIX ) and Total International Stock Index Institutional (ticker: VTSNX) will be reduced, according to an announcement by the University of Colorado Retirement Plans Advisor Committee.
| Investment Option | Ticker | Previous Expense Ratio | New Expense Ratio | Applicable plans |
|---|---|---|---|---|
| Vanguard FTSE Social Index Institutional | VFTNX | 0.12% | 0.07% | CU 401(a), CU 403(b) and SERP |
| Vanguard Total Bond Market Index Institutional | VBTIX | 0.035% | 0.025% | CU 403(b) |
| Vanguard Total International Stock Index Institutional | VTSNX | 0.09% | 0.06% | CU 403(b) |
Effects of fee reductions
This fee reduction can lead to significant savings for participants. For example, the annual investment fee for a $100,000 investment in the Vanguard FTSE Social Institutional Index will decrease from $120 to $70, resulting in a $50 annual savings for the participant.
Expense ratio fees are how investment firms like Vanguard cover operational costs, such as custodial, transfer agency, legal, and accounting expenses, and are typically deducted from the returns generated by mutual and exchange-traded funds. These fees can significantly impact investor returns, making Vanguard’s commitment to reducing them an important step in maximizing value for its clients.
This reduction marks what Vanguard calls its largest expense ratio reduction in history, with the fee cuts expected to save investors more than $350 million this year. In a February announcement, Vanguard President and CFO Greg Davis stated that the reduced fees will help "fund investors keep more of their returns" while also maintaining a competitive advantage for Vanguard’s funds.
Voluntary retirement plan benefits
Access to institutional funds like Vanguard’s options above is a significant benefit of CU’s plan structure and highlights how CU’s voluntary retirement savings plans are a great way to supplement your basic retirement plan. You can enroll or adjust your contributions at any time, fees are low and each plan gives you the flexibility to choose your own investments or have specialists do it for you.
Learn more
- Voluntary retirement plans are open to all CU employees. Find more information on the University of Colorado’s Voluntary Retirement Savings Plans webpage.
- Student employees can find more information on the Student Employee Retirement Program webpage.
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