VTSAX vs VTI

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newInvestor987654321
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VTSAX vs VTI

Post by newInvestor987654321 »

VTSAX vs VTI:
They are both very similar, than why would anyone invest in VTSAX when you may have to pay Capital gains tax for a MF ?
Only another benefit that I see with VTSAX is Auto Investing.. am I missing something ?

Let me add more information.
I am planning to invest a lumpsum amount (not necessarily looking for Auto Investing) and want to pay capital gains only when I "Sell".
So should I choose the ETF instead of MF ?
MrJedi
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Re: VTSAX vs VTI

Post by MrJedi »

VTSAX has same tax efficiency as VTI due to patented process that Vanguard has to transact the MF shares with their equivalent ETF shares.
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

newInvestor987654321 wrote: Thu Oct 21, 2021 2:51 pm VTSAX vs VTI:
They are both very similar, than why would anyone invest in VTSAX when you may have to pay Capital gains tax for a MF ?
Only another benefit that I see with VTSAX is Auto Investing.. am I missing something ?

Let me add more information.
I am planning to invest a lumpsum amount (not necessarily looking for Auto Investing) and want to pay capital gains only when I "Sell".
So should I choose the ETF instead of MF ?
They are not similar. They are identical.

As the prior post notes, with Vanguard the two are equally tax efficient. The ETF is slightly less expensive since those are less costly to administer.
sycamore
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Re: VTSAX vs VTI

Post by sycamore »

newInvestor987654321 wrote: Thu Oct 21, 2021 2:51 pm VTSAX vs VTI:
They are both very similar, than why would anyone invest in VTSAX when you may have to pay Capital gains tax for a MF ?
Only another benefit that I see with VTSAX is Auto Investing.. am I missing something ?

Let me add more information.
I am planning to invest a lumpsum amount (not necessarily looking for Auto Investing) and want to pay capital gains only when I "Sell".
So should I choose the ETF instead of MF ?
As noted in the previous replies, Vanguard's index funds are special - they don't distribute capital gains like mutual funds typically do.

Whether to choose ETF or mutual fund, consult the Boglehead wiki article ETFs vs mutual fund to learn about the pros & cons.
UpperNwGuy
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Re: VTSAX vs VTI

Post by UpperNwGuy »

I would go with VTI. ETFs are the future of investing. Mutual funds are are for old guys like me.
Hannibal Barca
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Re: VTSAX vs VTI

Post by Hannibal Barca »

I would go with VTSAX.

The main argument for ETFs over mutual funds is tax efficiency, but that's not an issue for Vanguard mutual funds.

I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF. I also don't have to worry about bid-ask spreads, or buying an ETF that's trading at a premium to NAV. And if I choose to ever switch to the ETF, I have the option to do so without a tax event. I couldn't switch from the ETF to the mutual fund, it's only one way.
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I would go with VTSAX.

The main argument for ETFs over mutual funds is tax efficiency, but that's not an issue for Vanguard mutual funds.

I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF. I also don't have to worry about bid-ask spreads, or buying an ETF that's trading at a premium to NAV. And if I choose to ever switch to the ETF, I have the option to do so without a tax event. I couldn't switch from the ETF to the mutual fund, it's only one way.
At least at Vanguard, dividends are reinvested into the ETFs at NAV. No cash drag. (At least for their ETFs and other popular 3rd party ones.)
Northern Flicker
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Re: VTSAX vs VTI

Post by Northern Flicker »

When VTI trades at a premium to NAV, deposit to VTSAX and subsequently convert the shares to VTI to avoid paying a premium to NAV for the ETF shares.
stan1
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Re: VTSAX vs VTI

Post by stan1 »

I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs). They are very similar with the user experience on buying/selling being one of the main differences right now.

Keep in mind you can convert a mutual fund to an ETF in taxable but not the other way around. In a tax advantaged account you can sell or buy as you wish without tax consequences.
HeelaMonster
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Re: VTSAX vs VTI

Post by HeelaMonster »

OP, you might also be interested in this earlier thread on same topic. I waded in thinking I was all set to convert from VTSAX (and other MFs) to VTI (and corresponding ETFs), and just confirming some details. By the time I got done hearing about and weighing the pros and cons, I had lost much of the motivation to switch (at least in my case). If I was starting out with original purchase, it may have been different, however.

viewtopic.php?f=1&t=355987
Longdog
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Re: VTSAX vs VTI

Post by Longdog »

Northern Flicker wrote: Thu Oct 21, 2021 5:29 pm When VTI trades at a premium to NAV, deposit to VTSAX and subsequently convert the shares to VTI to avoid paying a premium to NAV for the ETF shares.
Interesting concept. Have you ever been able to act on it? If so, how did you knew on the day you made the VTSAX purchase that VTI was going to close at a premium to its NAV?
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calwatch
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Re: VTSAX vs VTI

Post by calwatch »

To get mutual fund like pricing you can always submit a market-on-open or market-on-close order. Those auctions are deep and determine published opening and closing prices.
Hannibal Barca
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Re: VTSAX vs VTI

Post by Hannibal Barca »

exodusNH wrote: Thu Oct 21, 2021 4:51 pm
Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I would go with VTSAX.

The main argument for ETFs over mutual funds is tax efficiency, but that's not an issue for Vanguard mutual funds.

I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF. I also don't have to worry about bid-ask spreads, or buying an ETF that's trading at a premium to NAV. And if I choose to ever switch to the ETF, I have the option to do so without a tax event. I couldn't switch from the ETF to the mutual fund, it's only one way.
At least at Vanguard, dividends are reinvested into the ETFs at NAV. No cash drag. (At least for their ETFs and other popular 3rd party ones.)
I didn't realize that. When you buy ETFs on the Vanguard platform, I guess you're engaging directly with them, not a 3rd party on the exchange? And do you know if it's the same way when selling the ETF?
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

Hannibal Barca wrote: Thu Oct 21, 2021 8:53 pm
exodusNH wrote: Thu Oct 21, 2021 4:51 pm
Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I would go with VTSAX.

The main argument for ETFs over mutual funds is tax efficiency, but that's not an issue for Vanguard mutual funds.

I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF. I also don't have to worry about bid-ask spreads, or buying an ETF that's trading at a premium to NAV. And if I choose to ever switch to the ETF, I have the option to do so without a tax event. I couldn't switch from the ETF to the mutual fund, it's only one way.
At least at Vanguard, dividends are reinvested into the ETFs at NAV. No cash drag. (At least for their ETFs and other popular 3rd party ones.)
I didn't realize that. When you buy ETFs on the Vanguard platform, I guess you're engaging directly with them, not a 3rd party on the exchange? And do you know if it's the same way when selling the ETF?
At least at Vanguard, you can only sell whole shares. Fractional shares are automatically liquidated within a day or two and the proceeds transferred to your settlement account.
Northern Flicker
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Re: VTSAX vs VTI

Post by Northern Flicker »

Longdog wrote: Thu Oct 21, 2021 7:35 pm
Northern Flicker wrote: Thu Oct 21, 2021 5:29 pm When VTI trades at a premium to NAV, deposit to VTSAX and subsequently convert the shares to VTI to avoid paying a premium to NAV for the ETF shares.
Interesting concept. Have you ever been able to act on it? If so, how did you knew on the day you made the VTSAX purchase that VTI was going to close at a premium to its NAV?
Yes, I have done this for a different fund. You cannot be guaranteed that the trading of the ETF will close at a premium, but if the ETF is trading at a premium when you submit the request, buying the ETF at that time would have been at a premium.

You always buy the MutF shares at NAV, and can submit the request close to market close. You also are saved half the bid-ask spread.
Northern Flicker
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Re: VTSAX vs VTI

Post by Northern Flicker »

stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs). They are very similar with the user experience on buying/selling being one of the main differences right now.

Keep in mind you can convert a mutual fund to an ETF in taxable but not the other way around. In a tax advantaged account you can sell or buy as you wish without tax consequences.
I find mutual funds easier for harvesting losses. You just do a direct exchange from fund A to fund B that is not substantially identical to fund A.
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Re: VTSAX vs VTI

Post by TropikThunder »

Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF.
Are you thinking you can’t reinvest dividends in an ETF? Because that’s never been the case. Every brokerage I know of let’s you reinvest dividends in an ETF.

Hannibal Barca wrote: Thu Oct 21, 2021 8:53 pm When you buy ETFs on the Vanguard platform, I guess you're engaging directly with them, not a 3rd party on the exchange? And do you know if it's the same way when selling the ETF?
No, you’re not buying ETF’s directly from Vanguard (or selling to them the other direction), you’re buying them on the open market from an individual who wants to sell, just like a stock (that’s what the “exchange traded” part means).
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Re: VTSAX vs VTI

Post by TropikThunder »

There should be a wiki for this.
Hannibal Barca
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Re: VTSAX vs VTI

Post by Hannibal Barca »

TropikThunder wrote: Fri Oct 22, 2021 12:28 am
Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF.
Are you thinking you can’t reinvest dividends in an ETF? Because that’s never been the case. Every brokerage I know of let’s you reinvest dividends in an ETF.

Hannibal Barca wrote: Thu Oct 21, 2021 8:53 pm When you buy ETFs on the Vanguard platform, I guess you're engaging directly with them, not a 3rd party on the exchange? And do you know if it's the same way when selling the ETF?
No, you’re not buying ETF’s directly from Vanguard (or selling to them the other direction), you’re buying them on the open market from an individual who wants to sell, just like a stock (that’s what the “exchange traded” part means).
So is this basically an off-exchange liquidity pool situation? Namely, Vanguard is matching buyers and sellers on its platform, but there's no bid-ask spread, exchange fees (since it's not on an exchange), and NAV issues?
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ruralavalon
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Re: VTSAX vs VTI

Post by ruralavalon »

newInvestor987654321 wrote: Thu Oct 21, 2021 2:51 pm VTSAX vs VTI:
They are both very similar, than why would anyone invest in VTSAX when you may have to pay Capital gains tax for a MF ?
Only another benefit that I see with VTSAX is Auto Investing.. am I missing something ?

Let me add more information.
I am planning to invest a lumpsum amount (not necessarily looking for Auto Investing) and want to pay capital gains only when I "Sell".
So should I choose the ETF instead of MF ?
They are not "similar", they are identical. Vanguard Total Stock Market ETF (VTI) is just another share class of the regular mutual fund.

Both are very tax-efficient. The regular mutual fund is just as tax-efficient as the ETF share class.

A regular mutual fund has simpler trading mechanics. ETFs trade on a stock exchange. To switch ETFs requires two separate transactions. You sell your ETF on a stock exchange to another investor. Then you buy a new ETF on a stock exchange from a different investor. With a regular mutual funds you can do this in single seamless transaction.

With ETFs you may need to be aware of bid/ask spreads, and might want to use limit orders.

With regular mutual funds you can easily setup both automatic investment of new contributions and automatic reinvestment of dividends and gains.

With either an ETF or a regular mutual fund you pay capital gains when you sell.

Wiki article, ETFs versus mutual funds
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
atdharris
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Re: VTSAX vs VTI

Post by atdharris »

Depends. I hold mutual funds in my retirement accounts because I can invest 100% of my money and not have leftover cash. In my taxable account, I use ETFs. (I don't use a broker that offers fractional shares).
bloom2708
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Re: VTSAX vs VTI

Post by bloom2708 »

With VTSAX I can buy and transfer from my checking account.

With VTI I would first have to transfer from my checking account to the Settlement fund. Then buy from the settlement fund.

With VTI you will always have the "remainder" if you want to buy $1,000, some remainder will be left that stays in your settlement account un-invested.

I know some brokerages allow fractional shares.

The differences are minor, but I find working with ETFs (buy and hold) more difficult.
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Re: VTSAX vs VTI

Post by Northern Flicker »

Hannibal Barca wrote: Fri Oct 22, 2021 8:50 am
TropikThunder wrote: Fri Oct 22, 2021 12:28 am
Hannibal Barca wrote: Thu Oct 21, 2021 4:41 pm I like Vanguard mutual funds over the ETF equivalents because my dividends get reinvested automatically (avoiding cash drag on returns); I feel like the cash drag issue outweighs saving a few bps on expense ratio in the ETF.
Are you thinking you can’t reinvest dividends in an ETF? Because that’s never been the case. Every brokerage I know of let’s you reinvest dividends in an ETF.

Hannibal Barca wrote: Thu Oct 21, 2021 8:53 pm When you buy ETFs on the Vanguard platform, I guess you're engaging directly with them, not a 3rd party on the exchange? And do you know if it's the same way when selling the ETF?
No, you’re not buying ETF’s directly from Vanguard (or selling to them the other direction), you’re buying them on the open market from an individual who wants to sell, just like a stock (that’s what the “exchange traded” part means).
So is this basically an off-exchange liquidity pool situation? Namely, Vanguard is matching buyers and sellers on its platform, but there's no bid-ask spread, exchange fees (since it's not on an exchange), and NAV issues?
You buy ETFs at Vanguard with a brokerage account. If you buy shares of any ETF at Vanguard, they are functioning as a broker for purchasing the shares just as any other retail broker would. Vanguard has a separate process for converting mutual fund shares to ETF shares which does not involve trading with a counterparty. I don't know if this latter process is used for reinvestment of dividends, but dividends are reinvested at an average intraday price for the ETF.
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Re: VTSAX vs VTI

Post by CRC_Volunteer »

exodusNH wrote: Thu Oct 21, 2021 3:09 pm They are not similar. They are identical.
If the price of the MF and ETF are calculated from the NAV (if I understand things correctly), then why if the ETF priced so much higher than the MF?
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Re: VTSAX vs VTI

Post by 22twain »

BMWrider1986 wrote: Sat Oct 23, 2021 7:05 am
exodusNH wrote: Thu Oct 21, 2021 3:09 pm They are not similar. They are identical.
why if the ETF priced so much higher than the MF?
Why do 2-liter bottles of Coke cost more than 12-ounce cans?
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Re: VTSAX vs VTI

Post by anon_investor »

Northern Flicker wrote: Fri Oct 22, 2021 12:05 am
stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs). They are very similar with the user experience on buying/selling being one of the main differences right now.

Keep in mind you can convert a mutual fund to an ETF in taxable but not the other way around. In a tax advantaged account you can sell or buy as you wish without tax consequences.
I find mutual funds easier for harvesting losses. You just do a direct exchange from fund A to fund B that is not substantially identical to fund A.
+1. This is why I buy VTSAX.
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JoMoney
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Re: VTSAX vs VTI

Post by JoMoney »

Mutual funds trade at closing NAV regardless of whatever intraday gyrations that go on, and without the market spreads.
It's trivial amount, but when selling a mutual fund you don't get the SEC transaction fees stocks and ETFs get when trading directly (on top of the fees the fund itself is paying internally for transactions of its holdings).
Mutual funds have a shorter settlement period for the funds when buysing/selling.
While some brokers allow for fractional share trading, it's not available everywhere, and mutual funds allow you to buy/sell fractional amounts for any dollar amount.
I'm sure there's differences for different people, but when I create buy/sell orders there's always a bit of anxiety mixed with the thrill of being in the game along with some nuisance of having to sometimes play around with the limits to get something that executes... Mutual funds allow for a more hands-off automatic approach.
You don't necessarily have to have a brokerage account to buy a mutual fund.
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exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

BMWrider1986 wrote: Sat Oct 23, 2021 7:05 am
exodusNH wrote: Thu Oct 21, 2021 3:09 pm They are not similar. They are identical.
If the price of the MF and ETF are calculated from the NAV (if I understand things correctly), then why if the ETF priced so much higher than the MF?
The price of one share is irrelevant.

If you hold VTSAX at Vanguard and as them to convert you from VTSAX to VTI, you will wind up with the same dollar amount in VTI, just a different number of shares.

Occasionally, the ETF or mutual fund will go through a split to keep the per-share price lower. With mutual funds, it doesn't really matter since you have always been able to buy in exact dollar amounts above some threshold.

I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
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Re: VTSAX vs VTI

Post by sycamore »

exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
sycamore
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Re: VTSAX vs VTI

Post by sycamore »

exodusNH wrote: Mon Oct 25, 2021 11:32 am
sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
I get it now :oops:
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Re: VTSAX vs VTI

Post by TropikThunder »

BMWrider1986 wrote: Sat Oct 23, 2021 7:05 am
exodusNH wrote: Thu Oct 21, 2021 3:09 pm They are not similar. They are identical.
If the price of the MF and ETF are calculated from the NAV (if I understand things correctly), then why if the ETF priced so much higher than the MF?
This is simply because the initial (arbitrary) price for VTI per share was higher than the price per share of VTSAX. They’ve had the same return ever since though.
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anon_investor
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Re: VTSAX vs VTI

Post by anon_investor »

exodusNH wrote: Mon Oct 25, 2021 11:32 am
sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
Do other ETF providers do that?
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

anon_investor wrote: Mon Oct 25, 2021 3:08 pm
exodusNH wrote: Mon Oct 25, 2021 11:32 am
sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
Do other ETF providers do that?
Many other brokerages support fractional shares of both stocks and ETFs, or at least the widely-traded ones.
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Re: VTSAX vs VTI

Post by mervinj7 »

anon_investor wrote: Mon Oct 25, 2021 3:08 pm
exodusNH wrote: Mon Oct 25, 2021 11:32 am
sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
Do other ETF providers do that?
At Fidelity, I buy VTI with fractional shares (if needed). For example, I can sell $1k of ITOT and buy $1k of VTI during a TLH event.
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anon_investor
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Re: VTSAX vs VTI

Post by anon_investor »

exodusNH wrote: Mon Oct 25, 2021 3:15 pm
anon_investor wrote: Mon Oct 25, 2021 3:08 pm
exodusNH wrote: Mon Oct 25, 2021 11:32 am
sycamore wrote: Mon Oct 25, 2021 11:00 am
exodusNH wrote: Mon Oct 25, 2021 10:43 am ...I wish Vanguard would split more ETFs, since their platform only allows purchasing whole shares (minus DRIP.) Other brokerages support fractional ETFs.
Vanguard has a document https://www.vanguard.com/pdf/etfpdf.pdf that lets you "Find out which Vanguard index mutual funds
can be converted tax-free to Vanguard ETFs".

Curious which mutual funds are you interested in having an ETF share class for?
I was saying I wished they'd split some of their ETFs (e.g. the ones over $100/share) so make it easier for regular weekly buys and for allocating in an IRA. They don't support purchasing fractional ETF shares except as distribution reinvestments.
Do other ETF providers do that?
Many other brokerages support fractional shares of both stocks and ETFs, or at least the widely-traded ones.
I know about fractional ETF purchases, I have a Fidelity account where I can do that. But I meant, do other ETF providers bother doing splits to lower their ETF share prices? I know companies do this for their stock price, notably Apple and TSLA did this recently.
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

anon_investor wrote: Mon Oct 25, 2021 3:28 pm I know about fractional ETF purchases, I have a Fidelity account where I can do that. But I meant, do other ETF providers bother doing splits to lower their ETF share prices? I know companies do this for their stock price, notably Apple and TSLA did this recently.
Vanguard did it for 3 funds in March 2021. I don't know how often that happens in general.
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anon_investor
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Re: VTSAX vs VTI

Post by anon_investor »

exodusNH wrote: Mon Oct 25, 2021 3:38 pm
anon_investor wrote: Mon Oct 25, 2021 3:28 pm I know about fractional ETF purchases, I have a Fidelity account where I can do that. But I meant, do other ETF providers bother doing splits to lower their ETF share prices? I know companies do this for their stock price, notably Apple and TSLA did this recently.
Vanguard did it for 3 funds in March 2021. I don't know how often that happens in general.
Really? Which ones? I am buying ITOT in my Merrill Edge account because the share price of VTI is too high, and I am only buying ITOT with cash back from my BoA CCs, so I don't want to have to add external money. At Vanguard I can just buy VTSAX and at Fidelity I can buy fractional shares of VTI.
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

anon_investor wrote: Mon Oct 25, 2021 3:41 pm
exodusNH wrote: Mon Oct 25, 2021 3:38 pm
anon_investor wrote: Mon Oct 25, 2021 3:28 pm I know about fractional ETF purchases, I have a Fidelity account where I can do that. But I meant, do other ETF providers bother doing splits to lower their ETF share prices? I know companies do this for their stock price, notably Apple and TSLA did this recently.
Vanguard did it for 3 funds in March 2021. I don't know how often that happens in general.
Really? Which ones? I am buying ITOT in my Merrill Edge account because the share price of VTI is too high, and I am only buying ITOT with cash back from my BoA CCs, so I don't want to have to add external money. At Vanguard I can just buy VTSAX and at Fidelity I can buy fractional shares of VTI.
https://lmgtfy.app/?q=vanguard+etf+split :wink:
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anon_investor
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Re: VTSAX vs VTI

Post by anon_investor »

exodusNH wrote: Mon Oct 25, 2021 4:03 pm
anon_investor wrote: Mon Oct 25, 2021 3:41 pm
exodusNH wrote: Mon Oct 25, 2021 3:38 pm
anon_investor wrote: Mon Oct 25, 2021 3:28 pm I know about fractional ETF purchases, I have a Fidelity account where I can do that. But I meant, do other ETF providers bother doing splits to lower their ETF share prices? I know companies do this for their stock price, notably Apple and TSLA did this recently.
Vanguard did it for 3 funds in March 2021. I don't know how often that happens in general.
Really? Which ones? I am buying ITOT in my Merrill Edge account because the share price of VTI is too high, and I am only buying ITOT with cash back from my BoA CCs, so I don't want to have to add external money. At Vanguard I can just buy VTSAX and at Fidelity I can buy fractional shares of VTI.
https://lmgtfy.app/?q=vanguard+etf+split :wink:
:thumbsdown :thumbsdown :evil: :beer
FIREGuy88
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Re: VTSAX vs VTI

Post by FIREGuy88 »

stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs).
Why is a mutual fund (VTSAX) in a tax-advantaged account easier to rebalance than an ETF?
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

FIREGuy88 wrote: Sun Jul 30, 2023 11:39 pm
stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs).
Why is a mutual fund (VTSAX) in a tax-advantaged account easier to rebalance than an ETF?
Some people worry about market movements between the two individual transactions with ETFs.
Northern Flicker
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Re: VTSAX vs VTI

Post by Northern Flicker »

Northern Flicker wrote: Fri Oct 22, 2021 12:01 am
Longdog wrote: Thu Oct 21, 2021 7:35 pm
Northern Flicker wrote: Thu Oct 21, 2021 5:29 pm When VTI trades at a premium to NAV, deposit to VTSAX and subsequently convert the shares to VTI to avoid paying a premium to NAV for the ETF shares.
Interesting concept. Have you ever been able to act on it? If so, how did you knew on the day you made the VTSAX purchase that VTI was going to close at a premium to its NAV?
Yes, I have done this for a different fund. You cannot be guaranteed that the trading of the ETF will close at a premium, but if the ETF is trading at a premium when you submit the request, buying the ETF at that time would have been at a premium.

You always buy the MutF shares at NAV, and can submit the request close to market close. You also are saved half the bid-ask spread.
Since the thread was bounced I'll add that the strategy of buying the mutual fund and converting shares when the ETF is trading at a premium may not work as expected with ex-US funds due to fair value pricing models.
Last edited by Northern Flicker on Mon Jul 31, 2023 12:15 pm, edited 1 time in total.
FIREGuy88
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Re: VTSAX vs VTI

Post by FIREGuy88 »

Northern Flicker wrote: Mon Jul 31, 2023 12:09 am Since the thread was bounced I'll add that the strategy of buying the mutual fund and concerting shares when the ETF is trading at a premium may not work as expected with ex-US funds due to fair value pricing models.
What do you mean?
FIREGuy88
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Re: VTSAX vs VTI

Post by FIREGuy88 »

exodusNH wrote: Mon Jul 31, 2023 12:01 am Some people worry about market movements between the two individual transactions with ETFs.
What does that have to do with rebalancing?
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

FIREGuy88 wrote: Mon Jul 31, 2023 12:26 am
exodusNH wrote: Mon Jul 31, 2023 12:01 am Some people worry about market movements between the two individual transactions with ETFs.
What does that have to do with rebalancing?
Sell A.
Buy B.

With ETFs, those are two transactions separated by some amount of time.

With MF, transactions happen at the end of the day. Vanguard allows transactions between their mutual funds.
stan1
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Re: VTSAX vs VTI

Post by stan1 »

exodusNH wrote: Mon Jul 31, 2023 12:01 am
FIREGuy88 wrote: Sun Jul 30, 2023 11:39 pm
stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs).
Why is a mutual fund (VTSAX) in a tax-advantaged account easier to rebalance than an ETF?
Some people worry about market movements between the two individual transactions with ETFs.
That was not a concern or "worry" for me. My post was from 2021. Now Vanguard allows Vanguard ETFs to be bought and sold in dollars in addition to shares. Still two transactions rather than one but without the step of calculating the number of shares to buy and having up to several hundred dollars sitting in cash after rebalancing. Things change, today I wouldn't write what I did in 2021 (and even then it was more of a personal preference rather than a major point). But we do still have mutual funds in spouse's retirement accounts because they are understood, spouse understands how to buy/sell mutual fund shares but not ETF shares so leaving those accounts as is.
benihanna
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Re: VTSAX vs VTI

Post by benihanna »

calwatch wrote: Thu Oct 21, 2021 8:26 pm To get mutual fund like pricing you can always submit a market-on-open or market-on-close order. Those auctions are deep and determine published opening and closing prices.
Thanks for the pointer! That had not occurred to me.
exodusNH
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Re: VTSAX vs VTI

Post by exodusNH »

stan1 wrote: Mon Jul 31, 2023 8:58 am
exodusNH wrote: Mon Jul 31, 2023 12:01 am
FIREGuy88 wrote: Sun Jul 30, 2023 11:39 pm
stan1 wrote: Thu Oct 21, 2021 5:43 pm I prefer mutual funds in tax advantaged accounts (ease of rebalancing) and ETFs in taxable accounts (ease of tax loss harvesting with non-Vanguard ETFs).
Why is a mutual fund (VTSAX) in a tax-advantaged account easier to rebalance than an ETF?
Some people worry about market movements between the two individual transactions with ETFs.
That was not a concern or "worry" for me. My post was from 2021. Now Vanguard allows Vanguard ETFs to be bought and sold in dollars in addition to shares. Still two transactions rather than one but without the step of calculating the number of shares to buy and having up to several hundred dollars sitting in cash after rebalancing. Things change, today I wouldn't write what I did in 2021 (and even then it was more of a personal preference rather than a major point). But we do still have mutual funds in spouse's retirement accounts because they are understood, spouse understands how to buy/sell mutual fund shares but not ETF shares so leaving those accounts as is.
Dollar amount investing in Vanguard's ETFs was a welcome change in the tax-advantaged accounts. It works well as long as you don't get annoyed at a few pennies being left behind due to rounding. (I do. It's irrational. I keep the S&P 500 mutual fund in my IRA to mop up the leftovers.)

I avoid it in taxable because Vanguard's individual lot management is a joke. Maybe one day they'll fix it, but it's nearly unusable right now.
FIREGuy88
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Re: VTSAX vs VTI

Post by FIREGuy88 »

exodusNH wrote: Mon Jul 31, 2023 12:40 am
FIREGuy88 wrote: Mon Jul 31, 2023 12:26 am
exodusNH wrote: Mon Jul 31, 2023 12:01 am Some people worry about market movements between the two individual transactions with ETFs.
What does that have to do with rebalancing?
Sell A.
Buy B.

With ETFs, those are two transactions separated by some amount of time.

With MF, transactions happen at the end of the day. Vanguard allows transactions between their mutual funds.
Do you genuinely mean this? Are you saying there are people who pick the mutual fund over an ETF for this reason? or are you just taking out a magnifying glass and looking for microscopic differences?

Please be serious.
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