Vanguard VFIAX Index vs VOO S&P 500 ETF

[Still Learning]

VFIAX is a large cap blended fund where I found a note stating it is also available as an ETF. Clicked on "ETF" and was taken to VOO where I am already invested and planning to increase my stake. Except for a very modest change in fees they appear very much to be the same. For the VOO ETF I need to go through a settlement fund before I can make an ETF purchase, usually about 3-5 days. VFIAX allows me to avoid the settlement fund process.


Are there any substantial Pros/Cons that I need to consider between these options?

 

[OldShooter]

If you're a long term investor, it's probably only low fees that you should consider. Other ETF advantages, like being able to trade during the day, are don't-cares for long term investors.

Alternatively, just stick with VOO in the interest of portfolio tidiness. A few years ago I spent some time tidying up our portfolio, mostly combining positions in similar funds, and we are now 95% in one equity fund. The brokerage statements are a joy to read.

I didn't check but if VOO is the low cost fund then I think your decision is very easy.

 

[Still Learning]

Both have low fees with VOO at .003 and VFAIX at .004.

 

[OldShooter]

Both have low fees with VOO at .003 and VFAIX at .004.

So the decision is easy then. Simplicity and lowest fee line up for you. As a long term investor you don't need to care about the settlement fund issue.

 

[TheWizard]

The advantage of using ETFs like VOO is that you can use limit orders to possibly buy at a lower price.

Right now, for instance, stock funds are back to record highs, many of them (yippee!).

But I don't particularly like buying at record highs.
So I might set a limit order for 2% below the current record highs.

I already have a large amount in VOO, so my new monthly addition is less than 1% of my total.
Your mileage may vary...

 

[tulak]

Another benefit is you can buy VOO at any brokerage, where with VFAIX you're mostly stuck at Vanguard.

That's one reason I choose VTI over VTIAX.

 

[OldShooter]

Another benefit is you can buy VOO at any brokerage, where with VFAIX you're mostly stuck at Vanguard. ...

I dunno. I can buy VTIAX at Schwab with no transaction fees. I think I have been with them like 34 years and have mostly bought VG funds, rarely Schwab funds. Mostly habit, I guess. At one point, VG Admiral class shares could not be bought at Schwab but VG ditched that policy quite a while back.

 

[DrRoy]

I would add to what I already hold.

 

[target2019]

Still learning,
I think you're speaking of a Vanguard account, and can exchange some shares of a mutual fund for VWIAX. But if you wish to buy the ETF you'll have to sell shares of what you hold and wait for the settlement process.

The difference in expense ratio is extremely small. You can carry out the difference calculation over time and decide if ETF is worth waiting for, just a few days.

 

[TheWizard]

With Vanguard, I believe I can do a transfer of, say, $2000 from my linked checking account at my credit union to my settlement fund in my taxable account and then buy ETF shares using a market order an hour later.

Of course, Vanguard is assuming my $2000 will be good money in due time. If my transfer fails due to NSF, they might revoke that privilege.

As a practical matter, my target AA in my taxable account is 95% stock funds and 5% cash (MM fund) so I almost always have more old cash sitting in that fund compared to new money transfers coming in...

 

[tulak]

I dunno. I can buy VTIAX at Schwab with no transaction fees. I think I have been with them like 34 years and have mostly bought VG funds, rarely Schwab funds. Mostly habit, I guess. At one point, VG Admiral class shares could not be bought at Schwab but VG ditched that policy quite a while back.

It’s why I said mostly. Some brokerages allow you to buy the mutual funds, but charge a fee. It’s good to hear that Schwab doesn’t charge a fee.

Easier for me to buy the ETF version. No worries about brokerage limitations, with a bonus of a lower ER.

And I misspoke. VTIAX is Total International and matches with VXUS. VTSAX is the Total US and matches with VTI.

 

[OldShooter]

... Some brokerages allow you to buy the mutual funds, but charge a fee. It’s good to hear that Schwab doesn’t charge a fee. ...

Well they do charge on some VG funds. Not sure what the criteria are. But the last time I was charged to buy it was fixed $75, negligible on any kind of serious trade. No charge to sell.

 

[MarieIG]

I just checked over at TD Ameritrade. They charge a transaction fee to buy VTSAX ($74.95). They don't charge for the corresponding Vanguard ETF (or other Vanguard ETFs).


Whether there is a charge on a particular fund (other than Schwab funds) may depend upon whether the fund is a load or no load fund.