The New York Times reported, in part, on March 22, 2022:
What Vanguard did seemed innocuous at first.
In December 2020, it reduced the minimum needed to invest in the “institutional” target date funds used by many companies for employee retirement accounts. The threshold dropped to $5 million from $100 million. For people using the institutional funds through their workplaces, the fees were only 0.09 percent. For individuals using the retail funds, the fees were 0.14 percent.
Cheaper is better for investors, so that announcement set off a flood of sales of the retail funds, effectively requiring the fund managers to liquidate underlying investments. That, in turn, set off capital gains distributions for the diminished pool of retail investors who remained at the end of the year, Morningstar has found. Vanguard’s long-term capital gain distributions in 2021 averaged 12.1 percent, compared with less than 1 percent in recent years.
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