Reconsidering ETF Portfolio

[LOL!]

LOL, are you saying here that VG will let you switch from ETF's to funds and vice-versa at the closing day price of the fund (the NAV) for $50? So especially if the ETF is selling at a premium you will perhaps get a better deal depending on the trade amount. An observation, Rick Ferri has suggested buying/selling ETF's one-half hour before close (or after the open) so I guess this would be counter to his suggestion.

No, you added more to what I said than what I said. Consult with Vanguard for details and not with me.

Rick Ferri is a great guy who seems to understand the lay investor who needs help. I don't buy into his rules-of-thumb myself, but they are good if you are clueless.

 

[2B]

An observation, Rick Ferri has suggested buying/selling ETF's one-half hour before close (or after the open) so I guess this would be counter to his suggestion.

I held SPY and IWD in my taxable account until December when I sold to book the tax loss. I bought VTI.

I've seen some irrational moves by SPY right at the open and right at the close. The moves can be almost 1% up or down from the actual index. The only logic is that traders are anticipating index moves that may or may not happen. Most of the time SPY moved with the index during the day. The wild opens or closes were infrequent but not alway predictable.

 

[DblDoc]

One gotcha that has kept me away from ETFs,at least in my taxable acct, is that you pay a commission on each transaction. If you dollar cost average, as I do, those commissions add up and detract from your returns, esp. over time.

It depends on how much you purchase at a time and how long you hold them. Vanguard has a calculator to help determine which is better for a given situation.

https://personal.vanguard.com/us/faces/JSP/Funds/Tools/FundsToolsEtfCostSelectionContent.jsp?etfId=0

DD

 

[bamsphd]

LOL, are you saying here that VG will let you switch from ETF's to funds and vice-versa at the closing day price of the fund (the NAV) for $50?

From the brokerage fees and commissions page at: https://personal.vanguard.com/us/accounttypes/brokerage/ATSIntegrityValueContent.jsp under "Other Fees."

Vanguard ETFs $50 per conversion of conventional Vanguard index fund shares to shares of Vanguard ETFs. Flagship: no charge. (Fees may vary at other brokerage firms.)

As I understand it, this allows you to convert from an open ended Vanguard index fund into the equivalent ETF without triggering a taxable event. [Warning, I'm just a layman, I'm NOT a CPA, lawyer, etc.]

I have never encountered anything saying Vanguard will let you go the other direction. From an ETF to an open ended fund. However, I would suggest asking Vanguard if you have a desire to do that. Worst case, they say no.

 

[Lsbcal]

I did ask VG and they confirmed that one could convert funds -> ETF's but not vice-versa. I was just wondering if this allowed one to get the ETF's without having to worry about discounts/premiums but that is really not the case. You will just get the closing ETF price which may be distorted by funny things that happen toward the close. Oh well.

 

[ESRBob]

Lsbcal,
Did Vanguard say whether the exchange would be treated as a taxable event? If not it is significant.

The way things work with the IRS, the wash sale rule only works against you if you're trying to claim a loss. A sale and re-buy is counted as no sale at all (ie. no loss claimable) if you have a loss. But If you have a gain and sell from one fund and within 30 days buy into another 'effectively identical' fund, you've got yourself a capital gains tax liability. (Heads I win, Tails you lose... Funny how that works!)

Having Vanguard exchange these into ETFs without triggering the gain, sort of like switching from Investor-level fund to Admiral-level fund, is a big boon.

Anybody else have the scoop on this?

 

[Lsbcal]

I did not make this clear but all my trading is in tax deferred accounts. So taxes are not an issue for me.