Rebalancing with MFs vs. ETFs

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StophJS
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Joined: Mon Jun 25, 2012 2:34 am

Rebalancing with MFs vs. ETFs

Post by StophJS »

Hi all,

Just looking for some quick input on this subject. I've been looking around and reading quite a bit, but haven't learned enough to comfortably settle on which vehicle to use go for a passive, long-term portfolio I'm establishing. By all accounts, it seems to be somewhat of a wash between Admiral Shares and ETFs at Vanguard given that they share the same ERs. I've always used ETFs, so embarrassingly I am completely unfamiliar with the process of buying and holding mutual funds. My question is, could it potentially be easier with one or the other to rebalance annually? What about TLH? Any other reason I might be missing as to why Admiral Shares could be preferable? Thanks.

Edit: I thought I would piggyback on my own thread with an additional question rather than start another thread. I am also seeking advice on whether to invest in a lump sum or create a schedule for DCA. The amount is 100,000.
Last edited by StophJS on Thu Dec 13, 2012 11:08 am, edited 2 times in total.
Khanmots
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Re: Rebalancing with MFs vs. ETFs

Post by Khanmots »

I find it easier to work with mutual funds rather than ETFs. If I'm rebalancing I'll just say sell $X and buy $X and at cob everything happens. I'm not out of the market at all and I don't have to worry about bid-ask spreads or anything. With ETFs I've got to take time off to be home when the market's open (no trading on my work machine!), see what the bid-ask spread is doing (my ETF Is VSS a somewhat thinly traded one), and place an appropriate limit order. Then hope it fulfills. I just find them easier to work with. I can also run with fractional shares which makes monthly automatic investments easy and fully automated.
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Jay69
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Re: Rebalancing with MFs vs. ETFs

Post by Jay69 »

In our case we hold mostly Vanguard Mutual Funds at WellsTrade, so you have to wait for the sold funds to settle the next day before you can buy.

We keep about 3K in cash in one IRA so when lets say we make a contribution to our Roth we just buy/sell in the IRA where the cash is on the same day. If I had a to make a huge move it would take 2 days.

Now I did start with ETF's and got by with selling and buying on the same day but not sure if that was really kosher. I got tired with the bid spread on my international ETF (VXUS) always felt like I was taking it in the shorts. I just find the MF easy and lazy. In the end I don't think its a big deal eitherway.
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Khanmots
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Re: Rebalancing with MFs vs. ETFs

Post by Khanmots »

Jay69 wrote:In our case we hold mostly Vanguard Mutual Funds at WellsTrade, so you have to wait for the sold funds to settle the next day before you can buy.
Hadn't realized that was the case if you didn't hold at Vanguard. Vanguard lets me do an exchange, move $X from one fund directly to another. No sweep account in the middle or anything.
livesoft
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Re: Rebalancing with MFs vs. ETFs

Post by livesoft »

Jay69 wrote:In our case we hold mostly Vanguard Mutual Funds at WellsTrade, so you have to wait for the sold funds to settle the next day before you can buy.
I think I read on this forum that one can call up WellsTrade and do an EXCHANGE order, so that one does not have to wait a day for settlement. Can anyone confirm that?

It is true that the WT web page does not have the mutual fund exchange functionality.
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Jay69
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Re: Rebalancing with MFs vs. ETFs

Post by Jay69 »

livesoft wrote:
Jay69 wrote:In our case we hold mostly Vanguard Mutual Funds at WellsTrade, so you have to wait for the sold funds to settle the next day before you can buy.
I think I read on this forum that one can call up WellsTrade and do an EXCHANGE order, so that one does not have to wait a day for settlement. Can anyone confirm that?

It is true that the WT web page does not have the mutual fund exchange functionality.
I learned somthing new today, yes you can do an exchange at WellsTrade. You have to call them and they can perform the exchange, no charge according to the person I talked to today.

I would think this would be not to tough for WT to add to the web page.
"Out of clutter, find simplicity” Albert Einstein
livesoft
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Re: Rebalancing with MFs vs. ETFs

Post by livesoft »

Thanks for calling and confirming. :)
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Jay69
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Re: Rebalancing with MFs vs. ETFs

Post by Jay69 »

livesoft wrote:Thanks for calling and confirming. :)
You are most welcome
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Easy Rhino
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Re: Rebalancing with MFs vs. ETFs

Post by Easy Rhino »

I'd say mutual funds are easier because you can specify dollar amounts. makes it easier to get a desired position to a certain dollar amount, and makes it easier to get cash balance down to zero.

In my taxable account, though, I've got ETFs. It's a margin account, so that makes some trading and settlement easier. (I don't actually leverage myself with the margin).

My Roth IRA at wellstrade is a mix of ETFs and MFs. The last MF is what I manually 'sweep' my leftover cash into after rebalancing or making my annual contribution.
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Jay69
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Re: Rebalancing with MFs vs. ETFs

Post by Jay69 »

Easy Rhino wrote:I'd say mutual funds are easier because you can specify dollar amounts. makes it easier to get a desired position to a certain dollar amount, and makes it easier to get cash balance down to zero.

In my taxable account, though, I've got ETFs. It's a margin account, so that makes some trading and settlement easier. (I don't actually leverage myself with the margin).

My Roth IRA at wellstrade is a mix of ETFs and MFs. The last MF is what I manually 'sweep' my leftover cash into after rebalancing or making my annual contribution.
The last time I sold a MF at WellsTrade I had to use shares and not a dollar ammount, it was about 6 months ago however. Not a huge issue but I do find in a litle strange.
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