I am in the process of choosing between certain Vanguard ETFs and their corresponding Vanguard index mutual funds. I read some threads here related to the ETF vs. mutual fund topic before posting this message. The ETFs I am considering have expense ratios that are equal to those of the corresponding mutual funds, and the after-tax returns for both investment vehicles for the periods available only differ by a number of basis points (literally … in the one to two basis point range). It could be that the ETFs’ tax advantage isn’t showing up because in most cases there is only a one to three year time frame available to compare the competing investment vehicles (the ETFs are relatively new).
Once I begin the withdrawal phase I have no plans to do anything outside of selling once a year or so and periodically shifting my asset allocation. Please assume no brokerage costs for the ETFs – I will trade for free.
My conclusion: It doesn’t matter a significant amount in the end, but my gut says go with the ETF versions of each index simply because in theory it should be more tax efficient over time.
Thanks for any comments, Saver
Once I begin the withdrawal phase I have no plans to do anything outside of selling once a year or so and periodically shifting my asset allocation. Please assume no brokerage costs for the ETFs – I will trade for free.
My conclusion: It doesn’t matter a significant amount in the end, but my gut says go with the ETF versions of each index simply because in theory it should be more tax efficient over time.
Thanks for any comments, Saver