‘Windfall’ savings for Vanguard investors
Ian Alcock
Investors in Vanguard’s index funds and pooled superannuation trusts saved over $5 million through ‘crossing savings’, or reduced transaction costs, over the year to June 30, 2008, according to Vanguard Australia head Ian Alcock.
A ‘crossing’ or ‘special spread’ saving occurs when monies to be invested in a Vanguard fund are used to meet client withdrawals received on the same day, he said, adding that the benefits are continuing into the current financial year.
“Each investor who buys or sells Vanguard units on the day a crossing occurs receives a saving via a reduction in the normal buy and sell spreads.
“Buyers get more units for their investment monies and sellers get more dollars for the units they withdraw.”
While normal crossings will continue to occur on other business days, Alcock encouraged clients to use the remaining monthly scheduled crossing days this year (September 16, October 20, November 17 and December 15).
They could “increase the possibility of benefiting from a crossing saving by timing their transactions to occur on that day”, he said.
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