- What is indexing?
- What types of funds does Vanguard offer?
- How is Vanguard's investment approach different to other fund managers?
- How are unit prices calculated?
- What is the buy/sell spread?
- How often do your funds distribute?
- How are distributions paid?
- How do I transact with Vanguard?
- What about if I want to switch funds?
- How do I withdraw my money?
- Does Vanguard have a regular savings plan?
- Why are Vanguard's funds tax-effective?
- What are the fees and costs for Vanguard's funds?
- What information do I receive as an investor?
- Why do some funds not pay a distribution every period?
- Why are some of the 2007/08 distributions lower than last year?
What is indexing?
It's an investment strategy that attempts to closely match the investment returns of a target index.An index measures the change in value or performance of a market over time. For example, a share index measures the change in value of the shares of those companies included in the index.
An index manager constructs a portfolio that closely tracks the investment returns of the index by holding all, or a representative sample, of the securities in the index.
Index funds typically buy assets in an index then hold them for the long-term, minimising transaction costs and increasing performance potential.
What types of funds does Vanguard offer?
Vanguard's investment and super solutions for personal investors are suitable for individuals, businesses, self managed super fund investors and trusts. All funds are managed using our low-cost, indexing approach.| Types of funds | Description |
|---|---|
| Investor Index Funds | A range of single sector and diversified investment options including Australian shares, international shares, Australian property securities, diversified fixed interest and cash and four diversified options from conservative to high growth. Minimum investment is $5,000. Find out more. |
| Index Funds | A range of single sector and diversified investment options including Australian shares, international shares, Australian property securities, diversified fixed interest and cash and four diversified options from conservative to high growth. Minimum investment is $500,000. Find out more. |
| Personal Super Plan | A flexible super plan you can use throughout your life with low fees, choice of investment options, easy switching facilities and free consolidation service. Single sector options include Australian shares, international shares, Australian property securities, Australian fixed interest and cash. There are four diversified options from conservative to high growth. Find out more. |
| Personal Pension Plan | A flexible "account-based pension" for retirees seeking a tax-effective income. It has all the ingredients for a powerful retirement income strategy like: flexible pension and lump sum payments, low-costs, easy switching facilities plus a choice of investment options. Find out more. |
How is Vanguard's investment approach different to other fund managers?
As an index fund manager, Vanguard structures its portfolio to closely track the performance of a specified market index. Rather than holding every stock in the index, Vanguard builds its portfolios with the optimal number of securities to closely track the index performance, without incurring unnecessary transaction costs. It's what we call optimised indexing. This way investors get all the benefits of holding a diversified portfolio like lower risk and the potential for improved returns, without the associated costs.Active managers, on the other hand, seek to outperform a benchmark or market index using a combination of stock picking, market timing and asset allocation. They typically hold a much smaller number of securities than index managers but will generally have a high level of trading activity within the fund.
With Vanguard, indexing is not about timing markets or picking hot stocks. Instead, the emphasis is on broad diversification within a specific index and low portfolio turnover. This buy and hold approach can significantly reduce the cost of investing over time, which can lead to better returns.
How are unit prices calculated?
The net asset value per unit is determined by dividing the net asset value of a fund by the number of units on issue in the fund at the time of valuation (the valuation point). The net asset value for a fund is the value of assets of that fund, less liabilities of that fund. A valuation point for a fund is generally the close of business on a particular day in relevant markets.The prices are calculated as follows:
Purchase price = net asset value per unit plus the buy spread
Withdrawal price = net asset value per unit minus the sell spread
What is the buy/sell spread?
That's the difference between the entry and exit prices of a fund.The buy/sell spread is Vanguard's reasonable estimate of the transaction costs when buying and selling assets. These costs include things like brokerage, custody costs, government taxes and bank charges. The buy/sell spreads are paid to the funds, not Vanguard, to meet these expenses.
The purpose of the buy/sell spread is to protect investors in the fund from the costs associated with other investors moving money in and out of the fund.
How often do your funds distribute?
The income distribution frequency for each fund is shown in the table below.| Vanguard Investor Index Funds (Retail) | Distribution frequency |
|---|---|
| Last day of each month |
| Quarterly at 31 March, 30 June, 30 September, 31 December |
| Half-yearly at 31 December and 30 June |
| Vanguard Index Funds (Wholesale) | Distribution frequency |
|---|---|
| Last day of each month |
| Quarterly at 31 March, 30 June, 30 September, 31 December |
How are distributions paid?
You can choose to have your distributions re-invested in additional units in the same fund or paid directly to a nominated Australian bank account. If you don't make a choice, income will automatically be reinvested in additional units in the fund. All distributions will normally be paid within 15 business days after the distribution dates. To change your distribution option, please complete a Change of Details Form.How do I transact with Vanguard?
You can set up a direct investment through BPAY® or by sending a cheque.Existing investors will need to complete an Additional Application for Investment form if investing by cheque.How do I make additional investments?
If you wish to add to a fund in which you have already invested or invest in a new fund, you can use BPAY® or make a payment by cheque. Payments by cheque must be accompanied by an Additional Application Form. The minimum investment into a new fund (Investor Index Fund) is $5,000.What about if I want to switch funds?
You may change all or part of your investment by completing a Switching Form. When you switch funds you are effectively selling units in one fund and buying units in another, so transaction costs will apply. Your withdrawal will be processed using the sell unit price and your application at the buy price. Click here to see the unit prices.How do I withdraw my money?
You may withdraw part or all of your investment at any time by completing a Withdrawal Form. Withdrawal proceeds may be paid to either your nominated Australian bank account or by cheque payable to you and are usually paid within five business days of your request.Does Vanguard have a regular savings plan?
You can start a regular investment plan with as little as $100 by using BPAY®. You select how much and how often you want to invest through BPAY® by contacting your financial institution. By taking advantage of dollar-cost averaging, where you invest a fixed amount in a particular investment at regular intervals, you can help build your investment over time. For example, as markets rise, your money may buy fewer units in your managed fund but when the market is falling your money is buying more units because the price is cheaper. Click here to find out more.Why are Vanguard's funds tax-effective?
Vanguard's funds have a buy and hold strategy which means they have low turnover. Generally the lower the portfolio turnover the longer securities are held within a portfolio. If securities are held for more than 12 months, any capital gain on the disposal of those securities will attract a lower tax rate for investors who are eligible for the capital gains discount.What are the fees & costs for Vanguard's funds?
Vanguard has no entry fees, no exit fees (other than normal buy/sell spreads), no commissions to advisers and its funds management costs are substantially lower than the industry average at less than 1%. Click here to see our fees.What information do I receive as an investor?
Throughout the year, you will receive:- transaction confirmations
- quarterly transaction statements
- income distribution statements
- annual tax statements and tax guide
- annual capital gains tax statement after each 30 June, if you have withdrawn, switched or transferred units during the period
- Helm -Vanguard's quarterly newsletter
- Vanguard's most current PDS when issued
Why do some funds not pay a distribution every period?
Distributions for a fund vary from period to period and there can be times when no distribution is made. The distribution for a fund is determined by the level of distributable income for the period. If there is insufficient distributable income, there may not be a distribution.Are your funds available through financial advisers?
Yes. If you invest through a financial adviser, our funds are available through many of the master trusts and wrap accounts. To find a master trust or wrap service currently offering Vanguard funds please click here.Some financial advisers invest with Vanguard directly. To find a financial planner in your area, contact the Financial Planning Association on 1800 626 393 or visit www.fpa.asn.au.
Why are some of the 2007/08 distributions lower than last year?
The 2007/08 financial year was one of the most volatile in 20 years. As a direct result distributions from Vanguard's range of index funds have been impacted in varying ways. You can access a detailed report below for further information.
Vanguard_Investor_Index_Funds0708.pdf (PDF - 18KB) Vanguard_Index_Funds0708.pdf (PDF - 26KB)BPAY® is registered to BPAY Pty Ltd ACN 079137518
