Good old VNQ, Vanguard Real Estate Index ETF, is the one that delays my tax statements. I'll be happy to get rid of it when I can stand the LTCG hit. I think it's just the complications of being a real estate fund. My other ETF's have been fine.
WHY convert Admiral Funds to ETFs ??
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Good old VNQ, Vanguard Real Estate Index ETF, is the one that delays my tax statements. I'll be happy to get rid of it when I can stand the LTCG hit. I think it's just the complications of being a real estate fund. My other ETF's have been fine.
Telly
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Yup. I have VGSLX, the Vanguard REIT fund, but I have it in a Roth, so no effect on me. In a taxable account it would be a different story.
Telly
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DW and I have heard NOTHING from Vanguard for years now about converting mutual fund accounts to mutual funds held in brokerage accounts. No emails, no messages after logging in, nothing. I'm wondering what's up, are they really going to force people to convert? If so, why haven't DW and I heard about it again? Years ago, we got all sorts of messages about how easy it is to convert, why not do it now, etc.
audreyh1
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That’s fine unless there is a big premium or discount to NAV going on due to market stress/events. Then it’s acting like a stock instead of a basket of stocks. What’s the point of using an ETF that significantly diverges from the index it is supposed to track?
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In general, the more you trade, the larger the drag on performance. Can be due to transaction costs, spreads, taxable events etc. With a mutual fund you only have the opportunity to trade it ~250 times a year. With an ETF it is unlimited. I would say that if you are funding monthly or quarterly consumption by selling small bits of you portfolio in times of stress, the discount to NAV won't matter in a big way since from a historical perspective, these are rare events. If however you are moving significant positions i.e. large percentage in your retirement portfolio, you could be doing irreversible damage if you catch it wrong a few times. Then again, you may get lucky and catch the benefit side of the situation....like buying at the discounted prices.
There's not always a choice, but oftentimes one can simply wait. The dislocations tend to be short-lived for most ETF's
https://www.morningstar.com/article...discounts-and-premiums-during-turbulent-times
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audreyh1
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Yes, short lived and rare, and you can wait for things to settle down. But it does remove one of the real-time trading advantages of ETFs - being able to take advantage of a sudden plunge during the day. And the situation persisted over multiple days and didn’t affect the equivalent mutual fund.
Anyway, if you do want to take advantage of a sudden plunge, then are you really interested in the dislocation? Seems like you're actually trying to take advantage of it.
audreyh1
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Not if you were rebalancing and selling BND to buy an equity ETF. Later realizing you had sold at a 6% discount.
The bottom part of the Morningstar article I referenced above gives you a pretty good idea of some ways to mitigate this. A lot depends on what your particular brokerage house reports in real time. I've never paid much attention other than I just don't trade during high volatility times because I'm not much interested in trying to do short-term market timing. And I would suspect that even when things are relatively calm, it's extremely unlikely that a big divergence would happen at the moment I hit the "execute" button. I have a substantial amount of my stock fund holdings in a taxable account, so I'm interested in low cost and tax efficiency, hence the ETFs. In my 401K/Rollover IRA it's a mix of mutual funds and ETFs, driven by low cost and my view of future performance. Index funds in all cases.
audreyh1
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If a big divergence persists for 2 days, it’s not a matter of when you press that execute button.
That wasn't my point. I said that in times of relative calm, I wouldn't expect a sudden divergence when I pressed the execute button.
BigMoneyJim
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I also removed myself from VG marketing emails a year or two ago and quit getting the "TRANSITION NOW BECAUSE OUR OLD SYSTEM SUCKS" emails (slightly paraphrased, and perhaps slightly hyperbolic). And they also quit putting the big red "TRANSITION" button in my face every login a while back. I don't recall if I did anything to stop it, or if it just gave up on me.
But they clearly really want everyone to move, and I figure it's going to eventually be forced, and this post by easysurfer has a screenshot attached with a notice from Vanguard saying the old platform will be "retired from use in 2022 or earlier."
(click the little > arrow by their name to get to the original post w/screenshot)
I just got another email from Vanguard asking to make the transition away from Mutual Funds only to the "new and improved"investment platform.
At least now there is a year of 2022 or sooner to retire the old platform.
I'm still loitering and lingering until the deadline comes closer as funds area all I need. Index investing and rebalance once a year. Don't need the fancy stuff.
"Voluntary until it's not" is kind of corporate America's migration strategy these days. My situation is slightly unusual, so I'm taking the opportunity to make moves when it doesn't negatively impact me. I'm not necessarily trying to coerce others into making moves, but I am very butt hurt about my favorite institution for almost 30 years forcing me into a financial situation I didn't want to be in. So I may be coming off that way.
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Hello,
Fidelity no longer charges any fees to buy or sell ETFs.
https://www.fidelity.com/why-fidelity/pricing-fees
teejayevans
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All ETFs, or just Fido’s ?
audreyh1
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All stocks and ETFs.
All. In the past they had a deal with iShares only where they traded with no commission. But now it's all.
They do, however, have a small activity assessment fee still when selling an ETF ranging from $0.01 to $0.03 per $1000 of principal.
https://www.fidelity.com/etfs/overv...lies to,risks of their underlying investments.
Cheers.
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BigMoneyJim
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Yeah, as far as stock/ETF commissions, several app-based investment brokers had ways to trade free, and then someone not quite as small went commission-free, then in September/October Schwab did too, and the other big dominoes fell quickly. (Meaning Vanguard, Fidelity, TD Ameritrade, etc.)
There was a transition period there where several brokers had a program or family of ETFs that could be freely traded either freely or as part of a robo-advisor, but now market and limit orders for U.S. stocks & ETFs are free. (Well, depending on brokerage, but any brokerage who doesn't have free trades may not be around much longer.)
There was a transition period there where several brokers had a program or family of ETFs that could be freely traded either freely or as part of a robo-advisor, but now market and limit orders for U.S. stocks & ETFs are free. (Well, depending on brokerage, but any brokerage who doesn't have free trades may not be around much longer.)
We own a mix of Vanguard and iShares ETFs, all housed at Fidelity. I prefer ETFs in our taxable accounts due to minimal capital gain distributions. We own the same ETFs in tax-advantaged accounts just to keep the overall number of tickers to a minimum, and I do like intraday trading on the rare occasion that we make a trade. However, if I ever get around to it, I'll probably move all of our VTI positions in tax-advantaged to FZROX for the 0.0% ER. CGDs aren't a problem there. We own a lot of VTI and the compounded effect of the small ER difference is fairly substantial over 30 years. Definitely worth the 5 minutes to move it all.
SecondCor521
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At this point perhaps the tracking error is more of an issue than the expense ratio.
It used to be the case that Vanguard made up for the expense ratio by clever strategies such that their after expenses return was very nearly equal to the index return most of the time. It was only off by a few basis points, and this was back when their expense ratios were on the order of a dozen basis points. If they are still as clever, I would expect the Vanguard index funds to beat the index itself by 5-10 basis points.
I think FZROX is too new to know for sure what their tracking error will be.
It's true that FZROX has little history. But Fidelity's index funds have a long history of fee offsets as well. This is not unique to Vanguard. Here's an article that compares Fidelity's zero funds (FZROX) to Vanguard (VTI) on several criteria. The writer grades them "even" on fee offsets or positive tracking error and provides some historical data to support that. Overall, he gives the nod to VTI, but primarily due to tax efficiency. Of course, that is a well-documented advantage for ETFs in general, which is why I'll continue to hold VTI in taxable accounts. But more importantly, it is not relevant for tax-advantaged accounts, which is where I'll hold FZROX.
Based on some reading across the internet, especially in the early months of its existence, not everybody may realize that FZROX tracks a proprietary index created by (or for) Fidelity and, as such, is the only fund anywhere that tracks that index. So, it is important that it tracks its own index and I expect it will since both the fund and the index belong to Fidelity.
Now, it is a total market index, very similar to many other total market indices and comparing long term performance to those indices is important - time will tell. But there's no reason that FZROX should track those indices perfectly since it's not set up to.
My guess: In terms of performance, it will be well within envelope of other Total Stock Market funds, so unlikely to matter if held in a tax advantaged account. Key thing to watch out for if it's held in a taxable account and what its tax efficiency will be vs. other choices.
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I have the ETF equivalent of the mutual funds in my taxable portfolio. For one thing, it does not distribute capital gains so no surprises.
Also, one thing I really dislike about mutual funds is that if I buy/sell, i have no idea what the price for the transaction (or number of shares purchased) until after it is all over. I like being able to know the price of the ETF.
Also, one thing I really dislike about mutual funds is that if I buy/sell, i have no idea what the price for the transaction (or number of shares purchased) until after it is all over. I like being able to know the price of the ETF.
Brat
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My issue is the selection of investments. FBGRX doesn't have a comparable investments in an ETF
