Can cheap coffee and cheap mutual funds be linked in people’s minds?
Vanguard is betting they can.
The company has launched the At-Cost Café, a big red mobile coffee truck that will cross the country to educate people to the costs of investing.
The truck is making a six-city nationwide tour that started in San Diego today and will last for seven weeks. The truck will go to San Francisco, Chicago, Washington, D.C., New York and Boston. The truck will be parked at a busy location in each city for three days.
Along the way it will sell coffee at cost to represent the fact that Vanguard provides its services to the Vanguard funds and ETFs at cost. It is designed to help educate people to the fact that costs in investing can eat up returns over the long-term. The At-Cost Café will sell coffee at $0.26 per cup, one-fifth the average cost.
“We came up with this idea because we were asking: How do you get across the message of how important costs are in investing in an interesting and easy to understand way?” says Colin Kelton, principal of retail marketing and communications at Vanguard.
Vanguard also is increasing its education efforts about fund cost through online and social media.
“Low costs are a critical factor in determining retirement readiness and Vanguard believes that educating investors about cost will give them a better chance of investment success,” says Paul Heller, managing director and head of Vanguard’s retail investor group.
The average expense ratio for Vanguard funds decreased in 2012 by one basis point to 0.19 percent, about one-fifth the industry average expense ratio of 1.11 percent, Vanguard reports.