VIG vs VDIGX

[Brat]

We are with Fidelity so I pay $75 to buy VDIGX, $6.75 to buy VIG. Investment will be in a Roth, likely untouched for 10+ years. Which would be wiser? I can't find a Fidelity no-transaction-fund equivalent.

 

[audreyh1]

Can you automatically reinvest dividends in VIG with no fee?

 

[Brat]

Good question. I know that Fidelity reinvests dividends for stocks but I looked on the Boggleheads Forum where one poster wrote that Vanguard does not do that for their ETFs held at other investment houses. If that is true the mutual fund is better for the long term.

 

[sailor]

Good question. I know that Fidelity reinvests dividends for stocks but I looked on the Boggleheads Forum where one poster wrote that Vanguard does not do that for their ETFs held at other investment houses. If that is true the mutual fund is better for the long term.

Hmm,
Schwab lets me reinvest Dividends and capital gains of VNQ and VTI in my IRAs
Maybe it's broker dependent and not necessary mandated by Vanguard?
Ask your broker.

 

[pb4uski]

Other than account proliferation, why not buy direct from Vanguard for free?

 

[MichaelB]

We are with Fidelity so I pay $75 to buy VDIGX, $6.75 to buy VIG. Investment will be in a Roth, likely untouched for 10+ years. Which would be wiser? I can't find a Fidelity no-transaction-fund equivalent.

VDIGX has a different composition than VIG, with a lower beta. GMO research suggests that the lower beta is a higher quality investment and will outperform over the long run. Depending on how much you invest VDIGX might be a better investment once the $68 difference in fee is offset.

 

[Brat]

I've got about $80T to throw at this puppy. ETFs still bother me because i can't figure out how they hold title to stocks. The mutual fund may be the wisest.

We have always been Fidelity investors because of the availability of their investor centers. Husband and I don't use them much but they have been lifesavers when dealing with our parents estates. That is worth the $75 investment fee as eventually our kids will need to deal with our investments in turn.

 

[pb4uski]

......ETFs still bother me because i can't figure out how they hold title to stocks. ....

Isn't it the exact same as a mutual fund in that the fund itself is the owner of the individual stocks?

The difference is on the capital side - in the case of a mutual fund the stock of the fund (the fund shares you own) are not traded on an exchange but with the fund itself and in the case of the ETF the stock of the ETF is publicly traded like an individual stock.

To me it is no different than if a publicly traded company's "business" was investing and passing the investment performance (net of fees and expenses) of the investment portfolio through to its owners (other than a lack of corporate income taxes).

 

[Free To Canoe]

I have $ with Fidelity.
I have an ETF and they do not charge me to reinvest dividends (unless I missed it).
With the $75, you do not pay to cash out a portion or all of it. With ETFs you pay going in and when you cash out. If you wish to pull out a little for rebalancing etc, you pay the $6.75 for each occurrance.