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Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 8:24 am
by pinkpigh
I recently transferred my IRA from Vanguard to Merrill Edge and I noticed the mutual funds share numbers were rounded down. Example: since I can still log into Vanguard so I can see clearly that for one fund 458.422 shares were transferred out but only 458 shares are showing up at ME. I don't believe Merrill Edge is "stealing" my money but what is going on here? Thanks.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 8:46 am
by David Jay
Only full shares are transferred. Any fractional shares are sold and the money placed in your account. It may take a month or more for everything (dividends, etc.) to settle out.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 8:58 am
by pinkpigh
Thanks for the quick reply. Do I need yo make another transfer request from ME end to zero out the vanguard account or either party will do it automatically for me?

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 9:01 am
by alex_686
If it was a ACATS brokerage transfer, then no. Periodic sweeps will be happening to clean up the account. These are not practically fast or timely. It is a time consuming process to sweep over a few pennies from every partial sale, dividend, etc.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 9:47 am
by dbr
Your old account can also accrue interest or dividend payments and even earnings on the earnings for awhile. Hopefully it all goes over.

I made a mistake once of transferring 100% of each investment holding but failed to notice that is different from specifying the whole account, because in the former case those little interest payments were not transferred. It is also annoying that you may not be able to transfer little cash amounts less than $10. It all depends on what you actually did.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 9:50 am
by bertilak
David Jay wrote: Fri Sep 25, 2020 8:46 am Only full shares are transferred.
Is this due to the specific circumstances of this case?

I often gift shares on an "in kind" basis and fractional shares have always transferred. In my case it is always from one Vanguard account to another Vanguard account.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 9:58 am
by David Jay
bertilak wrote: Fri Sep 25, 2020 9:50 am
David Jay wrote: Fri Sep 25, 2020 8:46 am Only full shares are transferred.
Is this due to the specific circumstances of this case?

I often gift shares on an "in kind" basis and fractional shares have always transferred. In my case it is always from one Vanguard account to another Vanguard account.
Your case is not a transfer between brokerage firms.

I have never seen a fractional share transferred (I did several rollovers and transfers as I consolidated accounts prior to retirement). I suspect that this is the case for ACATS transfers.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 10:32 am
by bertilak
David Jay wrote: Fri Sep 25, 2020 9:58 am
bertilak wrote: Fri Sep 25, 2020 9:50 am
David Jay wrote: Fri Sep 25, 2020 8:46 am Only full shares are transferred.
Is this due to the specific circumstances of this case?
Your case is not a transfer between brokerage firms.
Well then, that might be the answer, at least in part. Thanks

Googling ACAT I did find the following at https://www.reddit.com/r/investing/comm ... pital_one/]
I contacted Cap One and ETrade
They were firm in stating that they will liquidate all fractional shares before transferring to any financial institution. https://content.capitaloneinvesting.com ... eement.pdf
Page 17, item 19 > B

Fractional Shares There is no public market to buy or sell fractional shares. Accordingly, and as indicated above, you understand that with the exception of mutual funds, we cannot transfer or deliver fractional shares of any security to another broker dealer. Fractional shares of mutual funds can be transferred or delivered to another broker dealer.
Note that Mutual funds are made the exception. Perhaps different institutions have different rules. Commets on that thread include:
  • I think it depends on the receiving firm.
  • It’s just a capital one thing. ACATs should liquidate the whole account regardless of how small the positions are.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 10:35 am
by livesoft
David Jay wrote: Fri Sep 25, 2020 8:46 am Only full shares are transferred. Any fractional shares are sold and the money placed in your account. It may take a month or more for everything (dividends, etc.) to settle out.
I can see that this would happen with ETFs, but that never happened with mutual fund shares that I transferred years ago.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 11:37 am
by Faith20879
livesoft wrote: Fri Sep 25, 2020 10:35 am
David Jay wrote: Fri Sep 25, 2020 8:46 am Only full shares are transferred. Any fractional shares are sold and the money placed in your account. It may take a month or more for everything (dividends, etc.) to settle out.
I can see that this would happen with ETFs, but that never happened with mutual fund shares that I transferred years ago.
My experience is similar. Have transferred MF in-kind many times to VG and all fractional shares arrived correctly.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 11:50 am
by alex_686
For context, for assets to be transferable they have to be held at DTC. There are 2 systems.

Stocks and bonds are held are held in one system. These are whole shares. Fractional shares are a accounting invention of the brokerage houses. So not formally recognized.

Mutual funds by contrast are "networked" in a different system. Fractional shares are recognized here.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 12:58 pm
by Faith20879
alex_686 wrote: Fri Sep 25, 2020 11:50 am Stocks and bonds are held are held in one system. These are whole shares. Fractional shares are a accounting invention of the brokerage houses. So not formally recognized.
Thanks for the enlightenment. Never owned individual bonds. Interesting to learn that bonds are also counted by shares.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 1:01 pm
by alex_686
Faith20879 wrote: Fri Sep 25, 2020 12:58 pm
alex_686 wrote: Fri Sep 25, 2020 11:50 am Stocks and bonds are held are held in one system. These are whole shares. Fractional shares are a accounting invention of the brokerage houses. So not formally recognized.
Thanks for the enlightenment. Never owned individual bonds. Interesting to learn that bonds are also counted by shares.
They are not counted as shares. They are counted as bonds. The standard is by "par $1,000", or a face value of $1000 when issued. I should have been more clear.

Re: Were mutual fund share numbers rounded down when transferring from Vanguard to Merrill Edge?

Posted: Fri Sep 25, 2020 5:19 pm
by David Jay
alex_686 wrote: Fri Sep 25, 2020 11:50 am For context, for assets to be transferable they have to be held at DTC. There are 2 systems.

Stocks and bonds are held are held in one system. These are whole shares. Fractional shares are a accounting invention of the brokerage houses. So not formally recognized.

Mutual funds by contrast are "networked" in a different system. Fractional shares are recognized here.
That explains my experience, my transfers between custodians were Stocks and ETFs, thus no fractional shares.