Want to switch from VBIAX to a comparable ETF

[Kat07]

Hello all! I'm a 71F, retired since end of 2019. Have not had to withdraw from my IRAs yet. Currently in my Vanguard mutual index funds I have 42% stocks and 24% bonds, and have 34% in other fixed IRA annuities and cash, not with Vanguard. I do want to rebalance the Vanguard funds so it's more like 30/70. But of course I want to do this when the market is up. I would exchange to a MM fund where the money is safe. Currently have VBIAX (Balanced index fund Admiral), VFIAX (500 Admiral), VWELX (Wellington), VTWNX (Target retirement), and VBTLX (total bond market, which I do want to dump!). I also have a Roth IRA, 100% stock index mutual funds, which I don't want to mess with. Every day if seems the market is up and down, according to what you-know-who says or does. If it's up one day, it could be down by the next morning. Therefore, I'm thinking of switching to a comparable ETF so I can do the transaction immediately during the day and not be dependent on what the market is by the end of the day. I'm looking at VTI ETF. Any other ETFs you can recommend? Anyways, what do you think of this strategy? Have never had ETFs before, but this would be a good reason to switch to them, plus the lower expense ratios, correct? I also really want to dump that VBTLX (Total Bond Market index fund and exchange it for something else, preferably very safe. Thanks for any help!

 

[Out-to-Lunch]

VBIAX is a 60/40 fund. I think to unwind this, with no danger from daily gyrations, you would have to sell your VBIAX and, on the same day, buy 60% of a stock fund (VTSAX, for example) and 40% of a bond fund (VBLTX, for example). This is called an exchange in VG parlance:

What is an exchange?​

An exchange is the sale of one or more mutual funds combined with the purchase of one or more mutual funds. The proceeds from the sells are used to pay for the purchases as part of the same transaction.
Limitations of an exchange include:

• Your total sell amount must equal your total buy amount.
• Non-Vanguard funds cannot be exchanged. You must sell a non-Vanguard fund and buy another fund in separate transaction. More information about trading non-Vanguard mutual funds.

At Vanguard, you're able to perform these types of exchanges:

• Selling one mutual fund and buying one mutual fund.
• Selling more than one mutual fund and buying one mutual fund.
• Selling one mutual fund and buying more then one mutual fund.

Then you have gotten rid of VBIAX, but have the same AA as if you didn't make the exchange.

From there, you can do whatever market timing moves you are comfortable with. You are then free to move those funds into a comparable ETF (VTI for VTSAX, etc.) to allow you to effect your further goals during the trading day.

 

[Kat07]

Thanks for the explanation! So after I exchange the VBIAX fund for the two new funds, I can immediately exchange each fund for an ETF? Can the bond fund be exchanged for a stock fund ETF?

 

[Kat07]

Thanks for the explanation! So after I exchange the VBIAX fund for the two new funds, I can immediately exchange each fund for an ETF? Can the bond fund be exchanged for a stock fund ETF?

Oh, never mind, guess the bond fund can only be exchanged to a bond fund ETF. Thanks again!

 

[Al18]

KISS - wait until about 3:30 pm EST - 30 minutes before market closes. You should have a good idea where the fund will trade after market closes.

Personally, I prefer mutual funds because the price only changes once a day. With an ETF, the price changes every second per day.