Why [does] Vanguard's VAIPX have such a high expense ratio?

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Robot Monster
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by Robot Monster »

PVolker wrote: Wed Jan 19, 2022 3:22 pm
exodusNH wrote: Tue Jan 18, 2022 7:21 am Individual bonds have a fixed maturity. You get the cash at date X regardless if you need it. If you need it earlier, you have to deal with the secondary market vs clicking "sell" with the fund.
On those few occasions when I've sold an individual treasury prior to maturity, I've also only had to click "sell" to liquidate it. What am I missing here?
I've never sold a TIPS. When you click sell, how long does it take for the transaction to complete? Do you have to wait for a buyer, or is it like selling a stock where it gets bought pretty much instantaneously?
Northern Flicker
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by Northern Flicker »

jeffyscott wrote: Wed Jan 19, 2022 3:18 pm There's about 8 other Vanguard managed bond funds with the identical ER of 0.1/0.2% for admiral/investor.

Similar to what I said earlier, it seems highly unlikely that this is just a coincidence. It seems clear that the ER is what it is simply because that's where Vanguard has chosen to set it.

I didn't count them, but there's similarly a bunch of muni funds with identical ERs.
The active muni funds have ERs of 0.09% and have the recordkeeping for the entire fund. VAIPX has substantial recordkeeping offloaded to 401Ks and other DC plans that hold the fund.

I do think the issue is not very relevant to an individual's portfolio. A difference of 1 percentage point in the percentage of bonds one holds as TIPS is likely to have a larger impact on portfolio performance than whether intermediate TIPS are held with SCHP, FIPDX, or VAIPX.
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FreddieFIRE
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by FreddieFIRE »

Robot Monster wrote: Wed Jan 19, 2022 3:52 pm
PVolker wrote: Wed Jan 19, 2022 3:22 pm
exodusNH wrote: Tue Jan 18, 2022 7:21 am Individual bonds have a fixed maturity. You get the cash at date X regardless if you need it. If you need it earlier, you have to deal with the secondary market vs clicking "sell" with the fund.
On those few occasions when I've sold an individual treasury prior to maturity, I've also only had to click "sell" to liquidate it. What am I missing here?
I've never sold a TIPS. When you click sell, how long does it take for the transaction to complete? Do you have to wait for a buyer, or is it like selling a stock where it gets bought pretty much instantaneously?
IIRC, it's almost always been instantaneous on either the buy or the sell. There were a few times where I started submitting the buy/sell order and paused to study the preview of the order and the book shifted enough that the order didn't go through and I just cancelled it and resubmitted. It's been a while, so I really don't remember. I do recall that if I just submitted the order and clicked through the final step quickly they always went through immediately. I have always used Fidelity. Other brokerages may be different.
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nisiprius
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by nisiprius »

My biggest gripe about VAIPX is the minimum $50,000 purchase.

Because it's not an index fund, because for whatever reason Vanguard's minimum purchase for VAIPX Admiral shares is $50,000. If you want less, you have to buy VIPSX Investor shares with an 0.20% expense ratio.

In contract, VTAPX, the Admiral shares of their short-term TIPS index fund, has a minimum purchase of $3,000, and the Investor share class, VTIPX, has been retired.
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Northern Flicker
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by Northern Flicker »

One could hold a combination of VTAPX and LTPZ to establish the desired intermediate duration, or hold SCHP in a Vanguard account.

I don't see why it is a problem if Vanguard chooses not to offer an intermediate TIPS index fund. Fidelity does not offer a short-term TIPS index fund, but you can hold VTIP or STIP in a brokerage account there.

Is this really a major problem or deficiency with Fidelity or Vanguard?
retiringwhen
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Re: Why [does] Vanguard's VAIPX have such a high expense ratio?

Post by retiringwhen »

I use VTIP and LTPZ just fine in a vanguard brokerage account. Allows me to extend the blended maturity to where I what it, plus allows VTIP to act as the bond fund I pull from first for expenses.
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