6

I have a Voya 401k account from employer. I've been investing in four funds, three of which (I thought) are "Vanguard" funds.

The names are identical to Vanguard funds, but they aren't the same at all. A Voya rep today told me that the Voya funds have no ticker symbols, can't be tracked like the Vanguard funds, are not "actually" the Vanguard funds, and, yes, they have very different prices:

Voya's "0899 Vanguard 500 Index Fund Adm" is priced today at $15.59/sh. The "Vanguard 500 Index Fund, Admiral Shares" symbol VFIAX, is $253.81/sh today.

What the actual **** is this about? Is this common? I understand about different share classes, but this seems like Voya has created some derivative funds of Vanguard funds, and uses the EXACT same names as the Vanguard funds.

This seems strange, wrong, confusing, stupid, inexplicable, and...fraudulent? Or, is it just a nice -- Voya lets employees bypass the Vanguard minimums and accumulate a lot of "shares" by offering what are really fractional shares of the Vanguard funds? But why use the exact same names? The Voya fact sheet on the fund has this exact title: "Vanguard® 500 Index Fund - Admiral (TM) Shares." Yet my shares are worth $15, but every market says the "Vanguard" fund shares are $250.

So, to boil it down to one question: What is the meaning of Voya having a $15 share "Vanguard 500 Index Admiral" fund, which isn't actually the $253 a share Vanguard fund with the exact same name?

  • 2
    I have heard this before, it seems to be not uncommon. no reason for worry so far. – Aganju Mar 10 '18 at 1:56
  • Fraudulent? really.... – quid Mar 10 '18 at 6:46
10

This is an example of a Collective Investment Trust (a longer read from time.com). Voya operates a CIT that buys VFIAX, and you buy into the CIT.

Why would Voya not just give you VFIAX directly? A positive possibility is that using a CIT gives them institutional treatment at Vanguard and advantages that they would otherwise not get; they may have had to join together with other companies to secure that. Of course, they could also do it to add on additional charges.

The regulations on CITs are a lot looser than mutual funds, with no ticker symbol and no requirement for a prospectus being the big ones.

  • 1
    Thank you for the answer and the link. Knowing exactly what this "thing" is makes it much easier to go forward without worry. I still don't like that there isn't some indication that this fund is a CIT on any of Voya's materials, and now I do have to follow up on their fees. – user8356 Mar 12 '18 at 12:44
  • "add on additional charges" is definitely the reason Voya is doing it. At the beginning of 2019 a bunch of their 401(k) core funds changed from the "advisor" share class which charged an extra 0.25% kicked back to the recordkeepers (Voya) with CITs that are exactly 0.32% higher expense than the underlying retirement-grade share classes, which effectively increased their take by 7 basis points and also caused the share value to start diverging from the underlying asset. – Ben Voigt Oct 29 at 18:10

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.