Vanguard Cut Minimum Initial Investments of Some Popular Funds
When I first started to buy mutual funds outside my retirement account 10 years ago, I basically avoided Vanguard funds. It wasn’t that I didn’t know Vanguard funds. I did a lot of research before buying the funds that I chose and I knew very well Vanguard funds, most of them are low-cost index funds, not only had the lowest fees in terms of expense ratio (ER), but also outperformed many its peers in the long term. The main reason that, as a new investor who just started working, I didn’t use any Vanguard fund was simply that I couldn’t afford to buy the funds that required $3,000, some as much as $10,000, minimum initial investment. So instead, I selected some actively managed funds that had much lower initial investment requirements, mostly $1,000 or $500 (for T. Row Price Funds, the minimum was $50 if you also set up an automatic investment plan with a monthly contribution of $50 at the account opening), so that I could buy more than one fund that I liked and start dollar-cost averaging from the beginning.
Not that I am not happy with the funds I chose back then (see my last comparison between my active funds and Vanguard funds), which I still own and buy every month now, but if I could start all over again, I probably would use more Vanguard funds in order to lower the overall costs of investing. If you are also starting to invest for yourself, you probably will not have the kind of problem that I had 10 years ago, not after Vanguard cut minimum initial investments of 27 mutual funds it offers from as high as $25,000 to $3,000 or $1,000 for 12 target-date funds. Some of funds that got the minimum reduced are quite popular, such as Wellington Fund and Windsor II Fund. Following is a stable that contains Vanguard mutual funds with reduced initial investments, together with some other basic information such as expense ratio (ER), yield, and current status (open to new investors or not).
Vanguard Fund Minimum Investments
Vanguard Reduced Mutual Fund Initial Investment Requirements
Fund Name Symbol Initial
ER Yield Open Vanguard Capital Opportunity Fund VHCOX $3,000 0.48% 0.34% No Vanguard Energy Fund VGENX $3,000 0.34% 1.28% Yes Vanguard Health Care Fund VGHCX $3,000 0.35% 1.46% Yes Vanguard International Explorer Fund VINEX $3,000 0.39% 1.25% Yes Vanguard PRIMECAP Fund VPMCX $3,000 0.45% 0.85% No Vanguard Selected Value Fund VASVX $3,000 0.47% 1.41% Yes Vanguard Convertible Securities Fund VCVSX $3,000 0.68% 3.69% Yes Vanguard Explorer Value Fund VEXPX $3,000 0.49% 0.13% Yes Vanguard Growth Equity Fund VGEQX $3,000 0.51% 0.64% Yes Vanguard Mid-Cap Growth Fund VMGIX $3,000 0.26% 0.38% Yes Vanguard Precious Metals and Mining Fund VGPMX $3,000 % % Yes Vanguard PRIMECAP Core Fund VPCCX $3,000 0.51% 0.95% No Vanguard Strategic Equity Fund VSEQX $3,000 0.30% 1.08% Yes Vanguard Wellington Fund VWELX $3,000 0.30% 2.61% Yes Vanguard Windsor II Fund VWNFX $3,000 0.35% 1.72% Yes Vanguard Target Retirement Income Fund VTINX $1,000 0.17% 2.32% Yes Vanguard Target Retirement 2005 Fund VTOVX $1,000 0.17% 2.36% Yes Vanguard Target Retirement 2010 Fund VTENX $1,000 0.17% 2.17% Yes Vanguard Target Retirement 2015 Fund VTXVX $1,000 0.16% 2.09% Yes Vanguard Target Retirement 2020 Fund VTWNX $1,000 0.17% 1.88% Yes Vanguard Target Retirement 2025 Fund VTTVX $1,000 0.18% 1.85% Yes Vanguard Target Retirement 2030 Fund VTHRX $1,000 0.18% 1.69% Yes Vanguard Target Retirement 2035 Fund VTTHX $1,000 0.19% 1.66% Yes Vanguard Target Retirement 2040 Fund VFORX $1,000 0.19% 1.57% Yes Vanguard Target Retirement 2045 Fund VTIVX $1,000 0.19% 1.64% Yes Vanguard Target Retirement 2050 Fund VFIFX $1,000 0.19% 1.58% Yes Vanguard Target Retirement 2055 Fund VFFVX $1,000 0.19% N/A Yes
Sure, for some actively managed funds listed above, the reduced $3,000 initial investment is still pretty high when compared with similar funds from other mutual fund companies, this is nonetheless a good news for Vanguard fans.
For Vanguard funds not mentioned here, most already have minimums at the $3,000 level, including its most popular index funds such as S&P 500 Index Fund (VFINX), Total Stock Market Index Fund (VTSMX), Total International Stock Index Fund (VGTSX) and Total Bond Market Index Fund (VBMFX). If you want to use as few funds as possible to build a diversified mutual fund portfolio, you will need at least three or four funds to cover both stocks and bonds, of the domestic and international markets. This means you will need about $10,000 or even more to start with. That’s not a small amount of money. If you can’t come up with the initial funds, but still want to invest with Vanguard, another option would be these funds’ ETF equivalents, VOO (S&P 500), VTI (Total Stock Market), VXUS (Total International Stock), and BND (Total Bond Market). And when you buy ETFs, there’s no such thing as minimum initial investments. Best of all, you can trade Vanguard ETFs for free if you are a customer
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