Leaving Vanguard ASAP

[foxfirev5]

Vanguard has saved me thousands of dollars in costs and is getting better each day. However if your investing style does not fit with the VG model it's probably best for all concerned that you move on. Simply a business decision

 

[bamsphd]

Not true. Fidelity has the same 90 day lock out for Spartan funds in my 403b and 401a.

If this is what it takes to keep the ER low I'm fine with that. The day traders can take their business elsewhere.

DD

+3

 

[Texas Proud]

To the OP.... did you move


Or was it just a vent....

 

[FinanceDude]

If this is what it takes to keep the ER low I'm fine with that.

That's no the reason they do that............what day trader do you know that day trades funds, when the world of ETFs and stocks is so large? It's one of those old outdated rules that some companies have.........

 

[MichaelB]

That's no the reason they do that............what day trader do you know that day trades funds, when the world of ETFs and stocks is so large? It's one of those old outdated rules that some companies have.........

I guess if Vanguard intends to have the lowest total fund costs & expenses as an objective, they should manage the funds to achieve it. Trading costs might not be as much as in the past but the churn of selling and buying still adds costs that are paid by the remaining investors. If they feel that a low investor turnover saves a few pennies and are investors are willing to sign up, what's the objection? These conditions are clear and up front - nothing hidden.

 

[Tractor guy]

That's no the reason they do that............what day trader do you know that day trades funds, when the world of ETFs and stocks is so large? It's one of those old outdated rules that some companies have.........

One thing I've learned in my life is "Whatever people CAN do, they WILL do." I agree it makes no sense to day trade funds but if Vanguard didn't discourage it, somebody would do it and drive up costs. Vanguard discloses their philosophy and rules all over the place so it shouldn't be a surprise. I'm all for Vanguard keeping my costs down by putting a time limit on round trips for a fund.

Lorne

 

[FinanceDude]

One thing I've learned in my life is "Whatever people CAN do, they WILL do." I agree it makes no sense to day trade funds but if Vanguard didn't discourage it, somebody would do it and drive up costs. Vanguard discloses their philosophy and rules all over the place so it shouldn't be a surprise. I'm all for Vanguard keeping my costs down by putting a time limit on round trips for a fund.
Lorne

That's not the reason...........

 

[73ss454]

That's it, if Vanguard won't let me day trade my mutual funds I'm moving everything to AG Edwards to I can give it away instead.

 

[FinanceDude]

That's it, if Vanguard won't let me day trade my mutual funds I'm moving everything to AG Edwards to I can give it away instead.

Shucks, I don't work at AG Edwards............

 

[DblDoc]

That's not the reason...........

Then what is?

DD

 

[FUEGO]

The great thing about Vanguard's restrictive policies is that they piss off and alienate all the right people. Those who place a high value on trading in and out of mutual funds more often than once every month or two will transfer their assets out of the fund and leave for "greener" pastures elsewhere. Leaving the other 90-95% of investors (weighted by asset value) who have a long term focus with lower costs due to less trading. I can't complain.

 

[Bestwifeever]

Yes, do tell us the secret behind the frequent trading restrictions FinanceDude! I googled the term and found this language for Vanguard and Fidelity, which is similar to other funds, but we're waiting with bated breath for you to tell us the real reason (.....):

Vanguard says: "Because excessive transactions can disrupt the management of a fund and increase the fund's costs for all shareholders, Vanguard places certain limits on exchanges and other transactions."

Fidelity says: "Excessive trading can be expensive and burdensome for long-term shareholders because it can:

• Reduce returns to long-term shareholders by increasing fund costs (such as brokerage commissions)
• Disrupt portfolio management strategies, such as forcing untimely and unwanted buying and selling of portfolio securities. "

 

[73ss454]

Shucks, I don't work at AG Edwards............

Hey, if your expense ratios are higher I'll just go with you.

 

[jayc]

To the OP.... did you move


Or was it just a vent....

I did not move yet. My confussion was the destination MM fund had $40K in it from the rollover. I did not pick this fund or put money in it. Vanguard did. I guess they can load it with any amount they want. It was initially explained as a MM sweep acct. So it never occurred to me that this fund has a dollar limit. It had nothing to do with time between transactions. Maybe it is their way of gently pushing you into other funds. I also had no other option to put the $ in a cash acct.

 

[FinanceDude]

Hey, if your expense ratios are higher I just go with you.

You wouldnt like me as an advisor, I charge a lot less than most advisors..........

 

[Texas Proud]

I did not move yet. My confussion was the destination MM fund had $40K in it from the rollover. I did not pick this fund or put money in it. Vanguard did. I guess they can load it with any amount they want. It was initially explained as a MM sweep acct. So it never occurred to me that this fund has a dollar limit. It had nothing to do with time between transactions. Maybe it is their way of gently pushing you into other funds. I also had no other option to put the $ in a cash acct.

There are plenty of MM funds in Vanguard...

Is it connected to a brokerage account? If not, what are the 'sweeping' into it? It could be a sweep account, but still have restrictions on you moving money into it...

Sooooo, with this knowledge... are ya still going?

 

[FinanceDude]

Yes, do tell us the secret behind the frequent trading restrictions FinanceDude! I googled the term and found this language for Vanguard and Fidelity, which is similar to other funds, but we're waiting with bated breath for you to tell us the real reason (.....):

Vanguard says: "Because excessive transactions can disrupt the management of a fund and increase the fund's costs for all shareholders, Vanguard places certain limits on exchanges and other transactions."


Fidelity says: "Excessive trading can be expensive and burdensome for long-term shareholders because it can:

• Reduce returns to long-term shareholders by increasing fund costs (such as brokerage commissions)
• Disrupt portfolio management strategies, such as forcing untimely and unwanted buying and selling of portfolio securities. "

Now tell me how that explains the rule for MM funds.........

 

[REWahoo]

Now tell me how that explains the rule for MM funds.........

It doesn't - any more than it explains the rule for using a new plate each time you take a trip to the salad bar.

The discussion (which you initiated) is about frequent trading restrictions, not closed Treasury/federal money market accounts.

Let's try to stay focused here...

 

[FinanceDude]

Let's try to stay focused here...

Interesting post, coming from you.........

 

[REWahoo]

Interesting post, coming from you.........

No arguement here...

However, you've indicated you know the "real reason" behind Vanguard's trading restrictions and were asked what that reason was by more than one poster. You haven't responded with an answer and as a Vanguard client I'd really like to know.

 

[FinanceDude]

No arguement here...

However, you've indicated you know the "real reason" behind Vanguard's trading restrictions and were asked what that reason was by more than one poster. You haven't responded with an answer and as a Vanguard client I'd really like to know.

It is quite simple really, makes perfect sense. Vanguard holds VERY LITTLE cash in reserve for redemptions. Since VG is a passive investment company, they want folks to invest and stay in the funds. Most fund managers keept 3-5% in cash for redemptions, VG is more like 1% or so. Just a different way of doing things......I got that from a VG manager who was at a meeting I went to, he was talking about their ETF portfolios, but was asked about it at a Q&A........

 

[REWahoo]

It is quite simple really, makes perfect sense. Vanguard holds VERY LITTLE cash in reserve for redemptions. Since VG is a passive investment company, they want folks to invest and stay in the funds. Most fund managers keept 3-5% in cash for redemptions, VG is more like 1% or so.

IOW, to keep the funds fully invested and hold costs down - just as Bestwifeever said.

Thanks.

 

[Major Tom]

The great thing about Vanguard's restrictive policies is that they piss off and alienate all the right people. Those who place a high value on trading in and out of mutual funds more often than once every month or two will transfer their assets out of the fund and leave for "greener" pastures elsewhere. Leaving the other 90-95% of investors (weighted by asset value) who have a long term focus with lower costs due to less trading. I can't complain.

+1

Also, how seriously can you take a post in which the OP calls Vanguard "a nickel and dime store"?

 

[FinanceDude]

+1

Also, how seriously can you take a post in which the OP calls Vanguard "a nickel and dime store"?

Just because most folks on here think VG walks on water, well, that still doesn't make them Jesus..............

 

[Major Tom]

Just because most folks on here think VG walks on water, well, that still doesn't make them Jesus..............

That wasn't the point I was trying to make. Referring to them (or thinking of them) as "Jesus" , is obviously an extreme and unrealistic characterization. In the same way, so is referring to them as a nickel and dime store.

My opinion only, of course.