Changes for three Vanguard funds affect underlying fund expenses

Changes to three Vanguard funds used in my529 investment options in April and May could impact underlying fund expenses for your clients. my529 passes on underlying fund expense changes to account owners, regardless of whether it’s a cost savings or increase.

In May, the volume of investments in a Vanguard fund used in several my529 investment options enabled the plan to qualify for a new share class, a move that reduces fund expenses by three basis points for many account owners.

Two underlying funds available in my529’s Customized investment options have updated underlying fund expenses in April and May, following announcements from Vanguard. One fund decreased expenses, while the other increased expenses. Clients invested in these funds in their Customized portfolios may see a change.

Share class change

A Vanguard fund featured in several my529 investment options qualified for a new share class as of May 2, 2024, decreasing its underlying fund expense by three basis points. my529 is passing the savings on to its account owners.

All my529 account owners invested in an option containing the Vanguard Total International Stock Index Fund will save money — and 78% of my529 account owners are invested in an option that includes this fund. my529 estimates that these account owners will collectively save more than $947,000 annually.

Of that total, the change provides a collective annual savings of $101,000 for clients who engage advisors, benefiting more than 37,000 accounts.

The ticker symbol for the fund shifted to VTISX from VTPSX.

Underlying Fund	Previous Fund Expense	New Fund Expense
Vanguard Total International Stock Index Fund	0.08%	0.05%*
* 0.05% equals $.50 for every $1,000 invested.

The total value of the my529 Trust’s assets invested in the fund surpassed $3 billion, a threshold that qualifies my529 for a lower-cost share class.

“Account owners invested in the fund through my529 will now pay an average of 58% less than what a retail investor would pay for the same fund,” said Richard Ellis, my529 executive director. “The savings investors realize through the fee reduction and the new share class can increase an account’s potential for growth over time.”

The Vanguard Total International Stock Index Fund appears in all 12 my529 Target Enrollment Date portfolios, as well as in six Static investment options. The fund is available as a single-fund portfolio in the Customized investment options, the my529 Total International Stock Index (UTVIX).

my529 consistently looks for opportunities to cut costs for account owners. With the shift to VTISX, my529 qualifies for the lowest-cost share class available for 20 out of 20 Vanguard funds used in my529 investment options.

“Vanguard’s funds have been a trusted component of my529’s investment options since the late 1990s,” Ellis said. “Their team shares our values — offering high quality funds at the lowest possible cost. We explore every avenue to pass along savings to the investor.”

Underlying fund expense changes

my529 is also passing along a reduction in underlying fund expenses for the my529 High-Yield Corporate Fund (UTVHX) single-fund portfolio, which corresponds to the Vanguard High-Yield Corporate Fund (VWEAX). Effective May 24, 2024, Vanguard dropped the fund expense by one basis point. The portfolio is available as a selection within the Customized investment options.

Another Customized investment option offering, the my529 Developed Markets Index (UTVDX), comprised of the Vanguard Developed Markets Index Fund (VDIPX), increased its fund expense as of April 26, 2024, a cost that was also passed on to account owners. Vanguard raised expenses for the underlying fund by one basis point.

Underlying Fund	Corresponding Single-Fund Portfolio	Previous Fund Expense	New Fund Expense
Vanguard High-Yield Corporate Fund	my529 High-Yield Corporate Fund	0.130%	0.120%*
Vanguard Developed Markets Index Fund	my529 Developed Markets Index	0.040%	0.050%**
*   0.120% equals $1.20 for every $1,000 invested. ** 0.050% equals $0.50 for every $1,000 invested.

See our fee schedules at my529.org.

From the FAN — Summer 2024