Vanguard Mutual funds vs ETF ER

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Punta Cana DR
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Vanguard Mutual funds vs ETF ER

Post by Punta Cana DR » Sun Dec 25, 2016 12:13 pm

All,

Thanks for this forum. I have noticed that ETF's have lower ER than mutual funds? Are there pro's and con's? I am al LT investor and not tempted to trade, based on that...the ETF's seem lower cost?

Am I missing something?

Thanks,

Nate79
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Re: Vanguard Mutual funds vs ETF ER

Post by Nate79 » Sun Dec 25, 2016 12:17 pm

Are you looking at Admiral or Investor of the mutual funds?

Punta Cana DR
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Re: Vanguard Mutual funds vs ETF ER

Post by Punta Cana DR » Sun Dec 25, 2016 12:27 pm

Most ETF's seem cheaper....and Admiral is same price as ETF, but other funds such as High Yield Dividend MF is VHDYX is almost double ER of VYM? Perhaps there is a reason?

retiredjg
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Re: Vanguard Mutual funds vs ETF ER

Post by retiredjg » Sun Dec 25, 2016 12:31 pm

ETFs can have very low ERs. At Vanguard, the ETF and Admiral Share mutual funds have the same ER. The Investor shares of the same fund cost a little more, but it does not take a long time to accumulate enough to move into Admiral Shares.

At other companies, it differs.

In the long run, keeping costs low is very important. But when you get down to very low vs ultra low….you might be dancing on the head of a pin. Especially when the portfolio is small.

livesoft
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Re: Vanguard Mutual funds vs ETF ER

Post by livesoft » Sun Dec 25, 2016 12:43 pm

There are pros and cons discussed at this URL: https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
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triceratop
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Re: Vanguard Mutual funds vs ETF ER

Post by triceratop » Sun Dec 25, 2016 12:44 pm

Punta Cana DR wrote:Most ETF's seem cheaper....and Admiral is same price as ETF, but other funds such as High Yield Dividend MF is VHDYX is almost double ER of VYM? Perhaps there is a reason?


It is not always the case that the ER of the Admiral shares mutual fund is the same as the ETF. Recently VTIAX has had an expense ratio of 0.12% while VXUS has had an expense ratio of 0.13%. However, it is often true.
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Punta Cana DR
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Re: Vanguard Mutual funds vs ETF ER

Post by Punta Cana DR » Sun Dec 25, 2016 1:11 pm

Thanks! Makes sense. At Vanguard, you can buy ETF's at no cost? If that is so, I can get ETF without a 50K investment and get same ER as an admiral share ER?

Many thanks!

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oldcomputerguy
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Re: Vanguard Mutual funds vs ETF ER

Post by oldcomputerguy » Sun Dec 25, 2016 2:02 pm

Punta Cana DR wrote:Thanks! Makes sense. At Vanguard, you can buy ETF's at no cost? If that is so, I can get ETF without a 50K investment and get same ER as an admiral share ER?

Many thanks!


If you have an account at Vanguard, you can buy Vanguard funds commission-free. The same can be said at Fidelity as well (a Fidelity account holder can buy Fidelity mutual funds and many iShares ETFs commission free).

The minimum investment in an ETF is the price of one share, unlike mutual funds which have a higher minimum. Vanguard Investor class mutual funds typically have a $3,000 minimum investment, Admiral shares require minimum $10,000 but typically have significantly lower ER than the Investor shares. At Vanguard the ETF shares are often the same ER as the Admiral class shares.
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Punta Cana DR
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Re: Vanguard Mutual funds vs ETF ER

Post by Punta Cana DR » Sun Dec 25, 2016 2:32 pm

Thanks! I just checked Fidelity. Thanks for tip. Looks like another option that I missed.

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