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What fees should I look out for?
Old 03-19-2009, 09:14 PM   #1
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What fees should I look out for?

Expense ratio is the obvious one but what are some of the other fees to look out for?

I need to rebalance my accounts. Does anyone know if Fidelity and Vanguard charge exchange fees?
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Old 03-19-2009, 09:32 PM   #2
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Everything is pretty transparent at Vanguard. About the only thing you have to watch for is that a few funds charge fees when you buy or sell, and a few charge fees if you sell "early" to discourage day-traders, etc. These tend to fall in two categories - tax-advantaged funds, and some of the newest or most specialized funds. These "fees" are generally not kept by Vanguard, but are paid to the owners of the funds.

You have to look at each specific fund to find out which might have these fees. You will also be warned before you buy and sell if you are subject to one of these fees.
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Old 03-19-2009, 09:34 PM   #3
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Vanguard has funds that have early redemption fees of up to 1%. I think some of the Fidelity funds charge up to 2%. One can avoid these fees by holding your shares the required minimum amount of time.

You didn't state which funds you are working with because if you did, we could probably be more helpful. For example, if you bought a Vanguard fund at Fidelity, then there would be the commission which is an expense. If you bought a Fidelity fund at Vanguard there would be the commission as well. However, if you buy a Vanguard fund at Vanguard, there is no commission.

If you buy a stock or fund that trades like a stock, then you may have the commission, the bid-ask spread and the discount/premium to net asset value to take into account.

If this is a taxable account, you should know that many of the Vanguard funds are about to pay dividends. If you "buy the dividend" you will incur a tax cost. You want to make sure that your stock dividends are "qualified" which means you need to hold the underlying security for 60 days in the 121 day window of time centered on the dividend payout (or maybe date of record).

I imagine most of these things you don't have to worry about except when you need to worry about them.
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Old 03-19-2009, 10:51 PM   #4
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Quote:
Originally Posted by Grep View Post
Everything is pretty transparent at Vanguard. About the only thing you have to watch for is that a few funds charge fees when you buy or sell, and a few charge fees if you sell "early" to discourage day-traders, etc. These tend to fall in two categories - tax-advantaged funds, and some of the newest or most specialized funds. These "fees" are generally not kept by Vanguard, but are paid to the owners of the funds.

You have to look at each specific fund to find out which might have these fees. You will also be warned before you buy and sell if you are subject to one of these fees.
Thanks for the info. That's what I figured but couldn't find too much information on their websites. I've been pretty happy with Vanguard so far. I'm glad I opened an account with them.
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Old 03-19-2009, 11:03 PM   #5
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Vanguard has funds that have early redemption fees of up to 1%. I think some of the Fidelity funds charge up to 2%. One can avoid these fees by holding your shares the required minimum amount of time.

You didn't state which funds you are working with because if you did, we could probably be more helpful. For example, if you bought a Vanguard fund at Fidelity, then there would be the commission which is an expense. If you bought a Fidelity fund at Vanguard there would be the commission as well. However, if you buy a Vanguard fund at Vanguard, there is no commission.

If you buy a stock or fund that trades like a stock, then you may have the commission, the bid-ask spread and the discount/premium to net asset value to take into account.

If this is a taxable account, you should know that many of the Vanguard funds are about to pay dividends. If you "buy the dividend" you will incur a tax cost. You want to make sure that your stock dividends are "qualified" which means you need to hold the underlying security for 60 days in the 121 day window of time centered on the dividend payout (or maybe date of record).

I imagine most of these things you don't have to worry about except when you need to worry about them.

I'm planning on transferring all of my Fidelity Small Cap Independence Fund into my other 3 Fidelity funds. I've had the 4 funds for almost 2 years.

I'm also planning on transferring a portion of my Vanguard 2040 Target fund into a Vanguard Small Cap Index Fund and a Vanguard Bond fund. I've had the Target fund for a little over 2 years but also signed my wife up for the same fund tonight. It's not a big deal if I have to wait (a year or so?) before I can transfer hers without paying an early redemption fee.
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