Vanguard price cuts rattle the brokers who sell its funds

New York

THE Vanguard Group, which in 40 years became the biggest mutual fund company by selling low-priced, market-matching funds, is competing with some of its best customers - the brokers and advisers who funnel client assets to its funds - by offering personalised service to investors with more than US$500,000.

Making things worse for outside advisers, Vanguard is charging 0.3 per cent of assets annually or less, compared with the 1-3 per cent common among brokers and independent financial advisers. That is down from the 0.7 per cent that Vanguard used to charge. And the company has widened the pool of eligible investors to include people with US$50,000 or more, down from the former minimum of US$500,000.