ETFs or Mutual Funds?
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
ETFs or Mutual Funds?
Bogleheads:
One of the decisions most investors face is whether to use ETFs or Traditional Mutual Funds?
Morningstar's Christine Benz interviews Vanguard's Joel Dickerson in this very informative interview on the subject:
Traditional Index Funds vs. ETFs: Which to Choose?
Best wishes
Taylor
One of the decisions most investors face is whether to use ETFs or Traditional Mutual Funds?
Morningstar's Christine Benz interviews Vanguard's Joel Dickerson in this very informative interview on the subject:
Traditional Index Funds vs. ETFs: Which to Choose?
Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
- Majormajor78
- Posts: 910
- Joined: Mon Jan 31, 2011 8:13 pm
Re: ETFs or Mutual Funds?
Good interview. I hadn't considered the possible increase in tax effeciancy (extremely slight) that ETF's can generate by picking and choosing the basis of the stocks they swap out for redemptions of the aggregation units.
While he did mention that ETF's offer a greater flexability for trading he appeared to be referring to being able to buy or sell shares at anytime during the day. He did not mention that ETF's have no short-term trading fees or trading lockouts that many mutual funds have.
While he did mention that ETF's offer a greater flexability for trading he appeared to be referring to being able to buy or sell shares at anytime during the day. He did not mention that ETF's have no short-term trading fees or trading lockouts that many mutual funds have.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."
Re: ETFs or Mutual Funds?
Another current interview from M* on ETF trading whcih may be relevant:
Best Practices for ETF Trading
Best Practices for ETF Trading
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: ETFs or Mutual Funds?
The link doesn't work on a direct click, but you can search for the title and get to the video.Doc wrote:Another current interview from M* on ETF trading whcih may be relevant:
Best Practices for ETF Trading
- nisiprius
- Advisory Board
- Posts: 52212
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: ETFs or Mutual Funds?
It worked for me. Maybe you need to have signed up for the no-cost basic Morningstar membership?grabiner wrote:The link doesn't work on a direct click, but you can search for the title and get to the video.Doc wrote:Another current interview from M* on ETF trading whcih may be relevant:
Best Practices for ETF Trading
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: ETFs or Mutual Funds?
I am a member, but it didn't work for some reason; possibly you have to be already logged in (I log in automatically from my home computer). The link works now.nisiprius wrote:It worked for me. Maybe you need to have signed up for the no-cost basic Morningstar membership?grabiner wrote:The link doesn't work on a direct click, but you can search for the title and get to the video.Doc wrote:Another current interview from M* on ETF trading whcih may be relevant:
Best Practices for ETF Trading
Re: ETFs or Mutual Funds?
My take on this is that index mutual funds would be the superior investment because there are no commissions on a purchase, and no commissions when you are liquidating shares in retirement.
That being said, I own both Index based ETF's and Index Mutual Funds in my retirement portfolios.
What I am not sure of is if you can reinvest dividends in an ETF like you would for a DRIP. And if you could, if you do it without fees. I think the answer to both is no. Could someone answer this?
Thanks.
That being said, I own both Index based ETF's and Index Mutual Funds in my retirement portfolios.
What I am not sure of is if you can reinvest dividends in an ETF like you would for a DRIP. And if you could, if you do it without fees. I think the answer to both is no. Could someone answer this?
Thanks.
A fool and his money are good for business.
Re: ETFs or Mutual Funds?
Good article. It answered my question on Dividend Reinvestment. The answer is yes with delays.
Thanks Taylor for posting the link.
Thanks Taylor for posting the link.
A fool and his money are good for business.
Re: ETFs or Mutual Funds?
I have a couple of Vanguard ETFs in a brokerage account in a Roth IRA at T. Rowe Price. TRP re-invests the dividends for me without charging a fee. It does take a few days before TRP actually receives the dividend and reinvests it. They can also re-invest dividends in a taxable account, but I chose to have those dividends put into my money market sweep fund instead.nedsaid wrote:What I am not sure of is if you can reinvest dividends in an ETF like you would for a DRIP. And if you could, if you do it without fees. I think the answer to both is no.
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
Re: ETFs or Mutual Funds?
Dividend reinvestment of your ETF dividends is a function of your broker. My experience is that TDAmeritrade does it free and without delays. That is, as soon as the money is available and the stock market is open, TDAmeritrade buys new shares for you with your dividend.nedsaid wrote:Good article. It answered my question on Dividend Reinvestment. The answer is yes with delays.
Thanks Taylor for posting the link.
Perhaps though, the video was hinting about the ex-dividend date, the record date, and the payable date without explaining them.
Although not about re-investment, but about timeliness of dividend payment, see also: http://www.bogleheads.org/forum/viewtop ... =1&t=87742
And here is a thread about payment dates and timeliness of mutual fund distributions: http://www.bogleheads.org/forum/viewtopic.php?t=65205
-
- Posts: 16
- Joined: Fri Nov 09, 2012 7:37 pm
Re: ETFs or Mutual Funds?
If I buy the ETF instead of the mutual fund am I going to see the same approximate returns (within 1% or 2%) after five years that I would have seen with the mutual fund??
Re: ETFs or Mutual Funds?
The five year return for VTI is 1.90%, the five year return for VTSAX (Admiral) is 1.91%.peanutbuddy wrote:If I buy the ETF instead of the mutual fund am I going to see the same approximate returns (within 1% or 2%) after five years that I would have seen with the mutual fund??
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
ETFs and Mutual Funds returns; tax-efficiency.
Update:
The 5-year before-tax return for VTI (Total Stock Market ETF) is 1.92%; 5-year after-tax return 1.57% = .35% lost to taxes
The 5year before-tax return for VTSAX (Total Stock Market Mutual Fund) is 1.91%; 5-year after-tax return 1.60% = .31% lost to taxes
Conclusion: The difference in returns and taxes during the past 5-years between the Total Stock Market ETF and Mutual Fund was meaningless.
http://performance.morningstar.com/fund ... tion?t=VTI
Best wishes
Taylor
The 5-year before-tax return for VTI (Total Stock Market ETF) is 1.92%; 5-year after-tax return 1.57% = .35% lost to taxes
The 5year before-tax return for VTSAX (Total Stock Market Mutual Fund) is 1.91%; 5-year after-tax return 1.60% = .31% lost to taxes
Conclusion: The difference in returns and taxes during the past 5-years between the Total Stock Market ETF and Mutual Fund was meaningless.
http://performance.morningstar.com/fund ... tion?t=VTI
Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Re: ETFs or Mutual Funds?
I use mutual funds for simplicity unless the ETF is significantly superior in terms of cost (in my case that'd be Vanguard International Small - VSS).
The broker running my 401k SDBA allows for dividend reinvestment. I don't believe there are any fees associated with this. I think my brokerage is provided by State Street.nedsaid wrote:What I am not sure of is if you can reinvest dividends in an ETF like you would for a DRIP. And if you could, if you do it without fees. I think the answer to both is no. Could someone answer this?