Moving from Mutual Funds to ETFs: Market or Limit Buys?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
stimulacra
Posts: 1006
Joined: Wed Dec 21, 2016 2:50 pm
Location: Houston

Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by stimulacra »

Moving a couple of core holdings from mutual funds to ETF equivalents. When doing this do most people do Market or Limit buys?

I find both to be equally nerve-racking; a 1% swing in volatility between selling the fund and buying into a similar ETF (1-2 days) would negate the few BPS in expense savings.

Once all done, what's easier from a rebalancing perspective?

Many thanks!
User avatar
LiveSimple
Posts: 2311
Joined: Thu Jan 03, 2013 6:55 am

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by LiveSimple »

For small amount I do limit, for large amount I do a limit order with 1 cent more than the ask, to make sure the execution will happen.
Invest when you have the money, sell when you need the money, for real life expenses...
livesoft
Posts: 85972
Joined: Thu Mar 01, 2007 7:00 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by livesoft »

Send me via PM or just put it here what the ticker symbols are and I will give an explicit answer. One will probably do both market orders and limit orders. One can do it in chunks over days, too. Or all at once. Get some practice with smaller amounts and have some fun and learn something for your efforts.
Wiki This signature message sponsored by sscritic: Learn to fish.
NYCPete
Posts: 856
Joined: Thu Apr 12, 2007 1:24 pm
Location: New York, NY

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by NYCPete »

stimulacra wrote: Fri Apr 16, 2021 11:08 am Moving a couple of core holdings from mutual funds to ETF equivalents. When doing this do most people do Market or Limit buys?

I find both to be equally nerve-racking; a 1% swing in volatility between selling the fund and buying into a similar ETF (1-2 days) would negate the few BPS in expense savings.

Once all done, what's easier from a rebalancing perspective?

Many thanks!
This dilemma is exactly what has kept me from converting my VG mutual funds to their ETF equivalents. Having to think or worry about volatility and which order type I've chosen for a purchase or sale violates the KISS principle, which I try my best to follow.

When I've looked at rebalancing if I decided to move to using ETFs, I keep coming back to the same conclusion. Which is that, when taking into account volatility and wondering when to execute orders, ETFs don't seem all that competitive if the mutual fund alternative is also relatively comparable in expense ratio.

Sorry, stimulacra. I know it wasn't what you were asking! :- )

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha
Soon2BXProgrammer
Posts: 3289
Joined: Mon Nov 24, 2014 10:30 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by Soon2BXProgrammer »

NYCPete wrote: Fri Apr 16, 2021 11:20 am This dilemma is exactly what has kept me from converting my VG mutual funds to their ETF equivalents.
Uh.. you don't have to sell and buy... you can ask vanguard to convert them.
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
livesoft
Posts: 85972
Joined: Thu Mar 01, 2007 7:00 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by livesoft »

NYCPete wrote: Fri Apr 16, 2021 11:20 amWhen I've looked at rebalancing if I decided to move to using ETFs, I keep coming back to the same conclusion. Which is that, when taking into account volatility and wondering when to execute orders, ETFs don't seem all that competitive if the mutual fund alternative is also relatively comparable in expense ratio.
I dunno. If one is observant then there are many things that one can do. For instance, yesterday when BND was trading up by about 0.45% I set a limit order to sell some BND shares for a price when it was trading up by 0.54% because BND almost never goes up by 0.5% in a single day AND when it does then next day it almost always trades lower. Anyways my order executed while I was out hiking. When I got back and saw that it had executed, I set another limit order to buy something with the thought: This bond ETF is going to drop before the market closes. Well, the limit was not reached and the limit order did not execute, but so what? Guess what happened today?
Wiki This signature message sponsored by sscritic: Learn to fish.
livesoft
Posts: 85972
Joined: Thu Mar 01, 2007 7:00 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by livesoft »

Soon2BXProgrammer wrote: Fri Apr 16, 2021 11:24 am
NYCPete wrote: Fri Apr 16, 2021 11:20 am This dilemma is exactly what has kept me from converting my VG mutual funds to their ETF equivalents.
Uh.. you don't have to sell and buy... you can ask vanguard to convert them.
I thought it was clear that NYCPete knew they could do the conversion, but NYCPete didn't want to deal with the anxiety of submitting ETF orders after the conversion for future investment transactions.
Wiki This signature message sponsored by sscritic: Learn to fish.
Soon2BXProgrammer
Posts: 3289
Joined: Mon Nov 24, 2014 10:30 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by Soon2BXProgrammer »

livesoft wrote: Fri Apr 16, 2021 11:26 am
Soon2BXProgrammer wrote: Fri Apr 16, 2021 11:24 am
NYCPete wrote: Fri Apr 16, 2021 11:20 am This dilemma is exactly what has kept me from converting my VG mutual funds to their ETF equivalents.
Uh.. you don't have to sell and buy... you can ask vanguard to convert them.
I thought it was clear that NYCPete knew they could do the conversion, but NYCPete didn't want to deal with the anxiety of submitting ETF orders after the conversion for future investment transactions.
thanks i miss understood.
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
caklim00
Posts: 2420
Joined: Mon May 26, 2008 10:09 am

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by caklim00 »

It depends... As long as it has decent market maker like Vanguard or Avantis can just put in market order. I used to waste too much time dealing with limit orders.
Topic Author
stimulacra
Posts: 1006
Joined: Wed Dec 21, 2016 2:50 pm
Location: Houston

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by stimulacra »

Sold off two bond funds to reallocate 15% into EDV… last two days have been interesting… I have a 60 day buy order for $128.

Once that is done will probably ask Vanguard to do a conversion of VTSAX, VTIAX, and VEMAX to their ETF equivalents, I'm currently digging around the website to see where I can initiate that without buying and selling. It's not super apparent to me on the website.

Lastly hoping to find an ETF equivalent to Vanguard Inflation-Protected Securities (VIPSX). VTIP is too short in duration. If VIPSX ends up being the sole legacy mutual fund after all of this, that's more than fine, I'm just being overly particular about dashboard groupings.

Many thanks for the two strategies outlined so far… I'll use them for rebalancing.
livesoft wrote: Fri Apr 16, 2021 11:18 am Send me via PM or just put it here what the ticker symbols are and I will give an explicit answer. One will probably do both market orders and limit orders. One can do it in chunks over days, too. Or all at once. Get some practice with smaller amounts and have some fun and learn something for your efforts.
livesoft
Posts: 85972
Joined: Thu Mar 01, 2007 7:00 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by livesoft »

stimulacra wrote: Fri Apr 16, 2021 12:06 pm... I have a 60 day buy order for $128.
I would never have limit order out there for more than the current market session (good for day).

Instead, I would set a price alert at my broker so the broker would send me an e-mail or text message for any given price. When I got the alert, then I would decide what to do and perhaps submit a limit order for that day.

Yesterday, I received an alert for the daily change of BND and was thus able to make a decision. That is, I don't have to pay attention to what's going on because my alerts do that for me.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
anon_investor
Posts: 15111
Joined: Mon Jun 03, 2019 1:43 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by anon_investor »

stimulacra wrote: Fri Apr 16, 2021 12:06 pm Sold off two bond funds to reallocate 15% into EDV… last two days have been interesting… I have a 60 day buy order for $128.

Once that is done will probably ask Vanguard to do a conversion of VTSAX, VTIAX, and VEMAX to their ETF equivalents, I'm currently digging around the website to see where I can initiate that without buying and selling. It's not super apparent to me on the website.

Lastly hoping to find an ETF equivalent to Vanguard Inflation-Protected Securities (VIPSX). VTIP is too short in duration. If VIPSX ends up being the sole legacy mutual fund after all of this, that's more than fine, I'm just being overly particular about dashboard groupings.

Many thanks for the two strategies outlined so far… I'll use them for rebalancing.
livesoft wrote: Fri Apr 16, 2021 11:18 am Send me via PM or just put it here what the ticker symbols are and I will give an explicit answer. One will probably do both market orders and limit orders. One can do it in chunks over days, too. Or all at once. Get some practice with smaller amounts and have some fun and learn something for your efforts.
To do a tax free conversion of eligible Vanguard mutual funds to ETFs, you have to call Vanguard. No other way right now.
User avatar
CommitmentDevice
Posts: 272
Joined: Tue Apr 02, 2019 3:25 am

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by CommitmentDevice »

I use market order and don't worry about it. I don't expect be able to purchase below the current market rate or accurately time the market going up or down in the next few. I also don't want the hassle or lost opportunity if the order isn't filled.
livelovelaugh00
Posts: 241
Joined: Sun Dec 25, 2016 7:15 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by livelovelaugh00 »

If the mutual funds have the equivalent etfs, you coulcall the brokerage to convert. It is not selling. I just did it days ago for my mutual funds in vanguard to convert to etfs. You can't do it yourself online.
User avatar
mokaThought
Posts: 481
Joined: Tue Jan 01, 2019 6:57 pm
Location: Texas

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by mokaThought »

If the bid/ask spread is small, market order and chill.

If it’s large (subjective, I know), limit order at the bid price for selling or the ask price for buying, just for a little self-protection.
"October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February."
dukeblue219
Posts: 4071
Joined: Fri Jan 29, 2016 11:40 am

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by dukeblue219 »

livelovelaugh00 wrote: Sat Apr 17, 2021 4:32 am If the mutual funds have the equivalent etfs, you coulcall the brokerage to convert.
Only applicable at Vanguard, and only for very select funds.

FYI.
tonyclifton
Posts: 990
Joined: Sat Feb 08, 2020 4:25 pm

Re: Moving from Mutual Funds to ETFs: Market or Limit Buys?

Post by tonyclifton »

A few thoughts and suggestions...if you cannot convert directly (ie some Vanguard mutual funds converted to vanguard ETFs).

Figure out the timing of your settlement of the sale of the mutual fund and purchase of the etf. You may not want to sell the mutual fund on a Friday and then have to wait to buy the etf on a Monday.

I’d also suggest you resist the urge to buy the etf during after hours or extended hours as the pricing may not be in your favor or distorted. Wait until the market is open and just know you are buying at the most correct market price.

If you happen to make a mistake watch out for selling the mutual fund, buying the etf and then quickly selling the etf to buy something else. This could be a trading violation if the transactions haven’t settled. You want to plan your purchases carefully to avoid being locked out of your brokerage account. They will give you several warning but if you try to “fix” a mistake you may rack these up quickly. Measure twice and cut once as they say.

You will very likely have some cash left over as you need to buy ETFs in while shares (unless your broker allows fractional shares). This could just be a few dollars or up to the price of one share of the ETF.

In terms of timing you could have this all done in a 14 hour period. Sell the mutual funds on a Tuesday at market close, buy the ETFs on a Wednesday morning a little after market open.

This is also a good opportunity to rebalance when you purchase your new ETF shares.

Last suggestion, prepare to have some regret. Maybe the market goes up or down while you are doing this. It may be in your favor or may not be in your favor. If you sell and buy it should be immaterial so long as you aren’t very unlucky to do this on the day of a major market boon or bust. If you are not changing your asset allocation any changes in the market should be immaterial as the ETF will perform the same as the Mutual Fund.

Good luck! You got this!
Post Reply