Has Vanguard changed it's "round trip" aka 30 days out-in policy for mutual funds?

[Tramper Al]

Hi,
I'm just trying to work out if Vanguard has changed the policy or if it's some glitch (or change) in how the website signals it.
This is about a sale and subsequent repurchase of Vanguard open end mutual fund within a Vanguard brokerage-type account (Roth IRA).
Normally when I redeem even 1 share of a Vanguard fund, I know I am starting a 30 day waiting period to buy even 1 share in this same fund. For some years, when I tried to repurchase too early, the website gave me a nice warning, in RED, that I was not allowed to do that. But today I happened to test the system with a short term round trip repurchase order and there was no such warning or restriction. Has policy or the website changed recently? Or is it the case now that Vanguard will allow me to walk into a prohibited order and just penalize/restrict me after it goes through?
As an aside, Fidelity of course uses a 30 day IN-OUT policy - and I do have to keep track of that one manually. No warnings.
Thanks in advance.

[exodusing]

The policy does not apply to all funds. Which fund were you trying to round trip?

[Mike Scott]

Depends on the fund.

[Tramper Al]

OK, I tried this morning with VGSLX - REIT index - with a purchase just a week after a sale. That's the only fund I can current test, due to recent sale. I just looked at the currently available prospectus for that fund, and it does still include the 30 day out-in limitation. I thought that the "round trip" language was used by Vanguard, but it may be Fidelity. I did appreciate the warning from Vanguard, as sometimes my intended purchase wasn't all that important, I could wait another week or whatever, or it could be managed/offset elsewhere. I definitely try to avoid an actual account restriction, and am happy to get any (before it's too late) warning like that. Thanks.

[rkhusky]

You can bypass the restriction at Vanguard by making a scheduled transaction.

[quantAndHold]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

[ResearchMed]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

IF OP has this holding in somethng like a 403b type of account (or 401k?), it may be that *only* mutual funds are allowed, but not any individual equities or any ETFs.

Our 403b is like that, for both money contributed by the Employer and by the Employee.

RM

[Tramper Al]

You can bypass the restriction at Vanguard by making a scheduled transaction.

That could potentially be helpful on occasion, thanks.

[Tramper Al]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

I think you mean out and in like that. I do use Vanguard ETFs in this account. The reasons one might prefer the mutual fund on a given day include 1) market close pricing that lines up with another end-of-day transaction elsewhere in the portfolio, 2) avoiding the spread/friction, and 3) matching settlement days - i.e. the funds meant for investment are not sitting in settled cash, but rather in another fund.

[sycamore]

Has policy or the website changed recently? Or is it the case now that Vanguard will allow me to walk into a prohibited order and just penalize/restrict me after it goes through?

I think this kind of question also needs to be directed at Vanguard directly. There's only so much we outsiders can know about what's happening inside Vanguard. If you ask Vanguard, please let us know what you find out.

To be honest, if someone told me that "the Vanguard website did X, Y, and Z today", I wouldn't count on that happening for me. Their website has been undergoing various development changes, including what appears to be "A/B testing" where a subset of users see certain features, while other users don't. Or the website behaves differently depending on what time of day you use it. I wouldn't plan on being able to make a round trip sale and then purchase for anything of value to me (like staying invested in the market using my chosen funds).

[quantAndHold]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

I think you mean out and in like that. I do use Vanguard ETFs in this account. The reasons one might prefer the mutual fund on a given day include 1) market close pricing that lines up with another end-of-day transaction elsewhere in the portfolio, 2) avoiding the spread/friction, and 3) matching settlement days - i.e. the funds meant for investment are not sitting in settled cash, but rather in another fund.

Yeah, but mutual funds are really a buy and hold investment. They’re not really meant for the kind of trading you’re doing. That’s why you’re having problems.

Also, we could argue about whether #1 and 2 are actually advantages, and #3 can be dealt with by having the other things you’re trading instead of holding be ETFs as well.

[jeffyscott]

I think they have added an exclusion from the policy for for small transactions. I noticed yesterday when putting in an order to sell some VTAPX (at Schwab) that I did not get the usual warning message about restrictions on buying after selling a Vanguard fund.

After reading this post, I put in an order to buy a small amount back and it was accepted. Then I found a prospectus supplement dated, June 20, 2023, that says:
Prospectus Text Changes
In the Investing with Vanguard section, under the heading “Frequent-Trading
Limitations,” the following bullet points are added under “These frequent-trading
limitations do not apply to the following”:
• Certain transactions below dollar value or other thresholds specified
by Vanguard....
https://www.vanguard.com/pub/Pdf/p1967.pdf

Note that my reading of that section of the prospectus indicates that VTAPX is covered by the 30 day policy, that it is not excluded as a "short term bond fund", though the wording is confusing:
Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard
Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.

BTW, Fidelity has had a $10,000 exemption for frequent trading of Fidelity funds for a few years:
https://www.fidelity.com/bin-public/060 ... b-Post.pdf

[investment guy]

I checked my Vanguard 401K and it ALLOWED me to rebalance even though I just rebalanced a couple of weeks ago (I just exited out this time without making any changes). In the past, I have always received verbiage in red stating that I cannot rebalance until the 30 day mark. All my stock mutual funds are common Vanguard funds.

[beyou]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

I think you mean out and in like that. I do use Vanguard ETFs in this account. The reasons one might prefer the mutual fund on a given day include 1) market close pricing that lines up with another end-of-day transaction elsewhere in the portfolio, 2) avoiding the spread/friction, and 3) matching settlement days - i.e. the funds meant for investment are not sitting in settled cash, but rather in another fund.

Due to your settlement concerns, I have gone all ETF.
Then settlements are matched, easy to rebalance if all open end or all ETF, but yes a mixture is a pain to reside together in a portfolio that you rebalance.

[Tramper Al]

I checked my Vanguard 401K and it ALLOWED me to rebalance even though I just rebalanced a couple of weeks ago (I just exited out this time without making any changes). In the past, I have always received verbiage in red stating that I cannot rebalance until the 30 day mark. All my stock mutual funds are common Vanguard funds.

Thank you for confirming exactly the (new) situation I have observed - very helpful. I just now tested the system by attempting to place a larger ($55K) exchange into the REIT fund VGSLX that I should be locked out of by the 30 day out-in restriction. But I too am allowed to make the exchange without any sign of the red text warning or roadblock. If indeed there is a specific dollar amount under which the restriction no longer applies, I can't find it. I may only know for certain if I do go through with a transaction execution and just wait and see if any consequence occurs.

With regard to phoning the Vanguard phone tree on this, I'm afraid I have found over the years that the opinion/guess of one or two Vanguard telephone reps on a "what will happen" question like this come with a high likelihood of being just incorrect.

Thanks as well for staying on my OP topic! So often on Bogleheads I find I have to endure and wade through many lectures, admonitions, etc. to the point that the original question is lost, ignored, or otherwise deemed unworthy. My main motivation in asking the question - if it is necessary to explain? - is to understand if I'll no longer be warned before (mistakenly) running afoul of a rule. That's all.

[Tramper Al]

If you want to trade in and out like that, why wouldn’t you just use the ETF (VNQ)?

I think you mean out and in like that. I do use Vanguard ETFs in this account. The reasons one might prefer the mutual fund on a given day include 1) market close pricing that lines up with another end-of-day transaction elsewhere in the portfolio, 2) avoiding the spread/friction, and 3) matching settlement days - i.e. the funds meant for investment are not sitting in settled cash, but rather in another fund.

Due to your settlement concerns, I have gone all ETF.
Then settlements are matched, easy to rebalance if all open end or all ETF, but yes a mixture is a pain to reside together in a portfolio that you rebalance.

Yes, so true. I have a couple of asset classes where the optimal best low cost (Vanguard) vehicle is available only in either ETF or mutual fund, but not both. As you say, it makes some rebalancing swaps a little messy (not so seemless) due to settlement timing. Thanks.

[redcliff]

I think they have added an exclusion from the policy for for small transactions. I noticed yesterday when putting in an order to sell some VTAPX (at Schwab) that I did not get the usual warning message about restrictions on buying after selling a Vanguard fund.

After reading this post, I put in an order to buy a small amount back and it was accepted. Then I found a prospectus supplement dated, June 20, 2023, that says:
Prospectus Text Changes
In the Investing with Vanguard section, under the heading “Frequent-Trading
Limitations,” the following bullet points are added under “These frequent-trading
limitations do not apply to the following”:
• Certain transactions below dollar value or other thresholds specified
by Vanguard....
https://www.vanguard.com/pub/Pdf/p1967.pdf

This change makes tax loss harvesting for individuals slightly more challenging at Vanguard:

1) If you sell at a loss below this new "dollar value or other threshold" then Vanguard does not prevent you from buying back into the fund, risking a wash sale.

2) If you sell at a loss above this new "dollar value or other threshold" the new Vanguard user interface does not indicate this in the holdings page like it used to. The trading restriction seems to only be visible in the trading profile page. Even though the holding has a trading restriction, Vanguard let me get all the way to the final "submit order" page and never stopped me; I did not click the final "submit order" button, so it is possible that Vanguard would stop it at that point, but that seems far too late in the process.

Perhaps Vanguard wants to make tax loss harvesting for individuals more opaque and easier to screw up so that more customers sign up for advisory services?

"Vanguard’s new service automates tax-loss harvesting by using an algorithm to execute trades. Funds are sold at a loss and replaced with Vanguard ETFs that seek to maintain the target asset allocation of the portfolio."
https://www.adviserinvestments.com/advi ... -to-robos/

If that theory is true, that does not seem investor friendly.

[Thesaints]

Not sure I see the problem.
If Vanguard web interface allows the transaction, then you get to do it. They cannot reverse it later “because we have an internal rule our terrible IT did not enforce”.
On the other hand, vigilance as the wash sale rule is concerned is the investor’s responsibility.

[Thesaints]

Not sure I see the problem.
If Vanguard web interface allows the transaction, then you get to do it. They cannot reverse it later “because we have an internal rule our terrible IT did not enforce”.
On the other hand, vigilance as the wash sale rule is concerned is the investor’s responsibility.

[Guitarguy14]

[Both posts by Guitarguy14 merged here. Best to keep all discussion on a specific topic in one thread. Especially if re-opening an old thread (which is OK when appropriate). Moderator Pops1860]

The odd thing to me is that one could still exchange money between funds more than twice within a 30 day period if it is not the same funds. I think the restriction is only within the same fund. So technically you coild move out of a fund into a target fund for example, a week later move to a money market and then a week later into another fund which you haven't owned yet. You just can't go back into the fund in which you sold your shares the week or two prior. It's still a lot of trading.

[Guitarguy14]

Is that restriction only a 30-day restriction? Or is over a longer period? So for example if somebody wanted to move their their money from One Fund into another fund, then into another fund, and then finally into another fund within a 30-day period. I don't know if that is allowed because I think it only has to do with the same fund so you can't move out of in the back into the same fund but as long as you're moving to other funds I don't believe it matters but I'm not sure I would have to check.

[rkhusky]

Is that restriction only a 30-day restriction? Or is over a longer period? So for example if somebody wanted to move their their money from One Fund into another fund, then into another fund, and then finally into another fund within a 30-day period. I don't know if that is allowed because I think it only has to do with the same fund so you can't move out of in the back into the same fund but as long as you're moving to other funds I don't believe it matters but I'm not sure I would have to check.

30 days from the date sold for each fund. So, in your example, each of the first three funds would have their own 30-day restriction (assuming each of the funds is restricted from frequent trading).

[Guitarguy14]

Is that restriction only a 30-day restriction? Or is over a longer period? So for example if somebody wanted to move their their money from One Fund into another fund, then into another fund, and then finally into another fund within a 30-day period. I don't know if that is allowed because I think it only has to do with the same fund so you can't move out of in the back into the same fund but as long as you're moving to other funds I don't believe it matters but I'm not sure I would have to check.

30 days from the date sold for each fund. So, in your example, each of the first three funds would have their own 30-day restriction (assuming each of the funds is restricted from frequent trading).

.

Thanks,
I may call today to get clarity to ensure what I am thinking is ok. I decided to just pick a target fund and stay in that fund till I retire. I made a few trades recently so I want to be sure it's allowed.
Thank you

[rkhusky]

30 days from the date sold for each fund. So, in your example, each of the first three funds would have their own 30-day restriction (assuming each of the funds is restricted from frequent trading).

.

Thanks,
I may call today to get clarity to ensure what I am thinking is ok. I decided to just pick a target fund and stay in that fund till I retire. I made a few trades recently so I want to be sure it's allowed.
Thank you

If it’s not allowed, the website will tell you and prevent you from buying. (This only applies to Vanguard’s frequent trading restrictions, not to wash sales)

[Guitarguy14]

Oh OK.
I did get a warning the other day saying that you can't trade again within 30-days but then it gave me a confirmation number.

[jeffyscott]

It's now very specific when I trade Vanguard mutual funds on Schwab, the restriction applies to sales of $10K or more:

This mutual fund has special restrictions. If you sell $10000 (or more) of this fund's shares, the Fund will restrict you from buying or exchanging its shares again in this account for the next 30 days.

Are the restrictions less clear when trading at Vanguard's own brokerage?

[rkhusky]

Oh OK.
I did get a warning the other day saying that you can't trade again within 30-days but then it gave me a confirmation number.

You get that warning when you sell, which is allowed. If you try to buy shares in that fund in that account too soon, you should be prevented.

[Guitarguy14]

Oh OK.
I did get a warning the other day saying that you can't trade again within 30-days but then it gave me a confirmation number.

You get that warning when you sell, which is allowed. If you try to buy shares in that fund in that account too soon, you should be prevented.

Ok thanks. I got the warning when swing a fund and getting into a money market. I wanted to be sure I could get into a different target fund in the next month or so.
I've decided to stay in a target fund and possibly bly get na advisor.
Thanks again.

[Guitarguy14]

Oh OK.
I did get a warning the other day saying that you can't trade again within 30-days but then it gave me a confirmation number.

You get that warning when you sell, which is allowed. If you try to buy shares in that fund in that account too soon, you should be prevented.

I just called support.

I thought there was a restrict on the number of moved per year but as you said it's only the fund you've traded out of in the last 30 days.

[ResearchMed]

You get that warning when you sell, which is allowed. If you try to buy shares in that fund in that account too soon, you should be prevented.

I just called support.

I thought there was a restrict on the number of moved per year but as you said it's only the fund you've traded out of in the last 30 days.

I think there is *also* wording that mentions that "too much trading" (probably in different wording) could result in restrictions. So racing around, selling, buying, small amounts of lots of things frequently could trigger some restriction. I have no idea how much activity it takes to generate that, or if there is advance warning.

RM