The bulk of our portfolio has been in ETFs for awhile. But they are not the panacea that some folks think they are. Many folks cannot figure out a good limit price for buying and selling them, so they have more anxiety when placing orders. In contrast, one can place a mutual fund order at any time and they know they will get a fair price at the end of the next trading session.
Here is a list of pros and cons of ETFs vs mutual funds: ETFs vs mutual funds - Bogleheads
I'd like to note that the expense ratios of Vanguard ETFs is the same as the expense ratios the admiral share class of the same fund. That is, ETFs do not have lower expense ratios. Also the tax efficiency is the same, too. If the fund has a dividend or capital gain distribution, then the ETF and the mutual fund share class will both have those distributions. It is true that the Vanguard ETF share class helps make the fund more tax efficient, but both share classes (ETF and mutual fund) benefit from that.
That link has a couple of things missing:
1. The settlement times of trades are different. T+1 for funds, T+3 for ETFs. This has consequences for folks who want to cash out of the brokerage account after a sell order is filled. It takes a few days longer to get your money when using ETFs. So if you have an emergency and need your money the day after tomorrow, then selling the ETF won't work for you because it will take 4-5 days (settlement + ACH transfer) to get your hands on the cash.
2. While both funds and ETFs can have their dividends automatically re-invested for free, the ETF share class of a Vanguard fund pays out the dividend a few days after the mutual fund does AND then it takes a day or two for your broker to reinvest the money. The broker decides what price they pay for your shares that they buy with your money. That price can be higher or lower than the price the mutual fund investor paid. Here's an anecdotal link on that: http://www.bogleheads.org/forum/view...?f=10&t=123871
A couple notes about Vanguard Brokerage Services (VBS):
They are pretty bad when it comes to real-time updating of your account and about any pending transactions or recent transactions. They generally take a day or two longer than other brokers to tell you about your dividends. So if want your dividend to pay a bill such as property taxes by a certain date, then Vanguard BS is not the broker to use even for their own ETFs. Here's a link that notes this: http://www.bogleheads.org/forum/view...hp?f=1&t=87742
VBS also seems to have issues with their downloading of 1099 forms into TurboTax. They might eventually figure out how to do this for all clients all the time, but each year there are some folks who complain about this.
I used to have a couple ETFs held at VBS, but I no longer do that and prefer to use other brokers.
Word is that the mutual fund side of Vanguard and the brokerage services side are slowly getting merged better together, but they are not quite there yet.