VG vs. Fidelity : exp ratio comparisons?

[Notmuchlonger]

knock knock... Open up! It's the Vanguard Police!!!! I am a big fan of Vanguard because their investment philosophy matches mine perfectly (good products at rock bottom prices). But I wouldn't mind if they started selling expensive investment products to suckers as long as they use the profits to lower their already low fund expenses for the rest of us diehards...

Fine with me. My taxable stuff is invested with them

 

[Nords]

I thought this was an interesting chart...
Vanguard s&p 500 index investor vs fidelity spartan investor

Now we just need to overlay 15 years of expense ratios.

 

[cute fuzzy bunny]

Doh. I'm not sure if the MSN money charting tool incorporates ER's into the "value of $10,000 invested" chart.

Seems sort of dumb if they dont.

 

[Nords]

Doh. I'm not sure if the MSN money charting tool incorporates ER's into the "value of $10,000 invested" chart.
Seems sort of dumb if they dont.

I bet the difference between the two graphs is Fidelity's steadily-shrinking expense ratio. When I compare those two tickers for a decade on Fidelity's website-- here's the big surprise-- they overlap so closely that it's hard to tell them apart.

But yeah, it's hard to imagine any financial journalist, let alone one from MSN, doing something dumb.

 

[cute fuzzy bunny]

Aint it?

I figured without factoring in expense ratios, a 1.5% fund might look good compared to a .25% fund.

But then again...that'd be a hell of a database to keep track of all the annual expense ratios over the years...

BTW I did a quick check of the admiral/high volume type shares (which fidelity has only had for around 7 years or so) and they were in lockstep.

 

[megacorp-firee]

I thought this was an interesting chart...

Vanguard s&p 500 index investor vs fidelity spartan investor

Is your point that VG is consistently (more or less) a better performer than Fido? Just asking.

 

[cute fuzzy bunny]

Thats a lot of presumptive point to draw from someone who posted a chart and says "this is interesting"...

I just made a chart and posted it. No analysis or point.

I guess all I noticed was that there was a difference between two el cheapo index funds over time.

Maybe that not all indexes end up with exactly the same returns due to the different ways of managing an index?

Maybe to note that the difference over a very long time wasnt that much, so it might not matter which ultracheap index fund you buy?

But we already knew those things, right?

 

[ERD50]

Now we just need to overlay 15 years of expense ratios.

Doh. I'm not sure if the MSN money charting tool incorporates ER's into the "value of $10,000 invested" chart.

Seems sort of dumb if they dont.

The expense ratios must be in the chart, right? The ERs are just part of their NAV? I mean, I've held several Fidelity and Vanguard funds, and I've never been billed separately for any expenses*, so it must just be in the NAV. If they were to chart it w/o ERs, seems like that would be a lot of backwards work.

Those charts did specifically say they include dividends, which many don't. W/O divies, it's tough to compare.

* exceptions would be the rare cases where there is an annual account fee (some low $ IRA?), or an early redemption fee. IIRC, with Vanguard, early redemption fees are actually kicked back into the fund, propping up it's NAV (assuming the fee is actually greater than any trading costs they incur).

I've had some other people (well, people selling load funds) talk about all the 'hidden fees' in no-load funds. Well, maybe you can say they are 'hidden' (in the prospectus?), but they are accounted for in the performance of the fund, no?

-ERD50

 

[FinanceDude]

I've had some other people (well, people selling load funds) talk about all the 'hidden fees' in no-load funds. Well, maybe you can say they are 'hidden' (in the prospectus?), but they are accounted for in the performance of the fund, no?

There are "hidden fees" in ALL mutual funds, stuff like trading costs, bid/ask spread costs, etc..............

 

[Nords]

Maybe that not all indexes end up with exactly the same returns due to the different ways of managing an index?
Maybe to note that the difference over a very long time wasnt that much, so it might not matter which ultracheap index fund you buy?

I wonder if it's possible to tease out the "Sauter effect" from the changing expense ratios, investor-fee tiers, and other distractions...

 

[cute fuzzy bunny]

I wouldnt count on it.

I'd much rather sit on a beach and eat chicken.

 

[ERD50]

There are "hidden fees" in ALL mutual funds, stuff like trading costs, bid/ask spread costs, etc..............

yes, those are costs that a purely theoretical index does not have. But they are not 'hidden' in a mutual fund, they show up in the published performance numbers.

-ERD50

 

[samclem]

But I wouldn't mind if they started selling expensive investment products to suckers as long as they use the profits to lower their already low fund expenses for the rest of us diehards...

I'd be disappointed. I guess I've drunk the Kool-Aid. The fact that they are customer-owned, that Bogle felt so strongly about low fees and indexing and about helping small investors get a better shake. I'd feel let down if the company started ripping people off, even if I benefited from it.

There are very few for-profit companies that I feel this way about. USAA is another one--I'd be surprised and disappointed if they became "like the rest" of the companies in their business.

 

[chinaco]

I'd be disappointed. I guess I've drunk the Kool-Aid. The fact that they are customer-owned, that Bogle felt so strongly about low fees and indexing and about helping small investors get a better shake. I'd feel let down if the company started ripping people off, even if I benefited from it.

There are very few for-profit companies that I feel this way about. USAA is another one--I'd be surprised and disappointed if they became "like the rest" of the companies in their business.

Some of it is the companies culture. I would not worry too much as long as the people that run the place have been with the company for 20 - 30 years. They have been indoctrinated about the overall goal. If a newbie took the helm, it is time to worry. That person may see things wuite differently.

VG has positioned itself as low cost, good service, with a decent spread of investments. Fidelity has positioned themselves to differentiate by more products, and slightly better service... (perception mainly).

 

[cute fuzzy bunny]

About the only differences I've seen in vanguard over the last ten years is being more market driven and reducing the amount of paperwork and time to do a simple transaction.

When people got excited about equities during the recent bull market, vanguard tweaked up the equities content and slowed the rate of conversion from equities to fixed income to suit the bug eyed demand for more risk/return. That really pissed me off and I had to convert some funds and take a capital gain I didnt want to take, because the product I bought no longer worked as it was supposed to work and that didnt suit my plans. The new managed payout stuff is also somewhat un-bogle-like. Not that theres anything wrong with that.

Vanguard also used to be known for having to mail/fax a lot of stuff, jump through two flaming hoops while patting your head and rubbing your belly to get a transaction done. They liked things to move slowly, in line with their "we want you to buy and hold and make very few sudden moves and loud noises, and go away if you're a market timer" approach. Not so anymore.

Customer service wise? Cant say. Had one or two annoying glitchy problems over the last ten years, nothing major, and everything else seems to have been well handled.

 

[Keyboard Ninja]

Just found this thread and had a noobie question.

I'm comparing FDFAX, and VDC. Just looking at the expense VDC is the clear winner (I think?). Now doing random internet searches I noticed lots of people claim Fidelity is more active than Vanguard when it comes to watching over their funds. Does that have any truth to it?

 

[cute fuzzy bunny]

And is that a good thing or a bad thing?

 

[Keyboard Ninja]

And is that a good thing or a bad thing?

Was that directed towards me? If so I would assume being more active is better, but I have been known to be wrong quite often . Is that even something to think about?

 

[ERD50]

Was that directed towards me? If so I would assume being more active is better, but I have been known to be wrong quite often . Is that even something to think about?

More active means higher fees, higher taxable events, and usually - worse performance (when compared with an index fund of equivalent volatility).

more here:

http://www.early-retirement.org/forums/showpost.php?p=569439&postcount=1

-ERD50

 

[cute fuzzy bunny]

One of those little paradoxes of investing. Experts messing with money produces worse results the vast majority of the time than just making a bunch of dartboard picks and sticking with them.

Unless your investing expert is Buffet, Soros, Lynch or up until recently, Bill Miller.

Anyone else notice how Millers Value Trust Fund has been absolutely punched in the face the last two years? He's already unraveled himself to trailing the S&P500 over 1, 3, 5, and 10 years. Another bad year and he'll undo 15 years of beating the index.

 

[Gardnr]

One of those little paradoxes of investing. Experts messing with money produces worse results the vast majority of the time than just making a bunch of dartboard picks and sticking with them.

Unless your investing expert is Buffet, Soros, Lynch or up until recently, Bill Miller.

Anyone else notice how Millers Value Trust Fund has been absolutely punched in the face the last two years? He's already unraveled himself to trailing the S&P500 over 1, 3, 5, and 10 years. Another bad year and he'll undo 15 years of beating the index.

Yep, he was riding that wave and now it's crashing down. He was extraordinarily right for quite some time though, eh? And the longer that "track record" got, the more people probably piled into it (it's not closed, is it?), and now they're wondering why it went so wrong.

 

[cute fuzzy bunny]

He picked huge winners at about the right times. But considering the number of fund managers and funds, far more of them should have accidentally bought dell, amazon, google and the rest at just about the right time and beaten the market.

Yet theres only a small number, and almost always for a very short time.

 

[Nords]

... and now they're wondering why it went so wrong.

[-]Peter Lynch Success Syndrome[/-] Fund bloat.

After expense ratios, this is the #2 reason we exited mutual funds for ETFs.