Buying an ETF - Always From Settlement Fund?

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Mag18Nus19
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Buying an ETF - Always From Settlement Fund?

Post by Mag18Nus19 »

Can I buy a Vanguard ETF (VGLT) directly from a Money Market Fund (VUSXX) in both retirement and non-retirement accounts, or do I always have to move the money to the Settlement Fund first, and then make the transaction?

Also, if I have to move to the Settlement Fund first, do I have to wait for the money to show up in the Settlement Fund first, or if the transaction has been initiated can I move forward with the ETF purchase?
rkhusky
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Re: Buying an ETF - Always From Settlement Fund?

Post by rkhusky »

That’s what the exchange function is for, a combined sell then buy. It goes through the settlement fund, but you don’t have to do it manually.

Edit- whoops, I know exchange works for mutual funds, but I don’t do ETF’s. But give it a try and see. You can always play around and then cancel - you’re fine as long as you don’t click submit.
Topic Author
Mag18Nus19
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Re: Buying an ETF - Always From Settlement Fund?

Post by Mag18Nus19 »

Thanks for the reply. I did try the exchange method, it did not work from VUSXX to VGLT directly.
TSC15
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Re: Buying an ETF - Always From Settlement Fund?

Post by TSC15 »

You have to buy ETF from settlement fund, it cannot be sell/buy via exchange with another ETF or MF. So sell VUSXX first, and then buy the ETF right afterward. It takes one day to settle MF sell and 2 days to settle ETF buy, so Vanguard will let you sell and buy in one sequence.
Topic Author
Mag18Nus19
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Re: Buying an ETF - Always From Settlement Fund?

Post by Mag18Nus19 »

Yep, that makes sense to me. Thank you for the explanation.
Topic Author
Mag18Nus19
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Re: Buying an ETF - Always From Settlement Fund?

Post by Mag18Nus19 »

TSC15 wrote: Tue Apr 02, 2024 10:17 pm You have to buy ETF from settlement fund, it cannot be sell/buy via exchange with another ETF or MF. So sell VUSXX first, and then buy the ETF right afterward. It takes one day to settle MF sell and 2 days to settle ETF buy, so Vanguard will let you sell and buy in one sequence.
So I went to try to see if I could sell and buy in one sequence today. Did the sell, but cannot buy.

"This purchase exceeds the current funds available balance. Funds are due in your settlement fund by the settlement date of the trade. Otherwise, securities in the account may be liquidated to pay for the purchase, and the account may be restricted."

Did I misunderstand and by sell and buy in one sequence you meant sell, wait 1 day to settle, then I can buy the ETF?
exodusNH
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Re: Buying an ETF - Always From Settlement Fund?

Post by exodusNH »

Mag18Nus19 wrote: Wed Apr 03, 2024 2:51 pm
TSC15 wrote: Tue Apr 02, 2024 10:17 pm You have to buy ETF from settlement fund, it cannot be sell/buy via exchange with another ETF or MF. So sell VUSXX first, and then buy the ETF right afterward. It takes one day to settle MF sell and 2 days to settle ETF buy, so Vanguard will let you sell and buy in one sequence.
So I went to try to see if I could sell and buy in one sequence today. Did the sell, but cannot buy.

"This purchase exceeds the current funds available balance. Funds are due in your settlement fund by the settlement date of the trade. Otherwise, securities in the account may be liquidated to pay for the purchase, and the account may be restricted."

Did I misunderstand and by sell and buy in one sequence you meant sell, wait 1 day to settle, then I can buy the ETF?
It's just warning you about a potential problem.

You technically don't have the funds because the mutual fund sells after the market closes.

But, because the mutual fund will settle before you have to pay for the ETF it's fine.
Topic Author
Mag18Nus19
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Re: Buying an ETF - Always From Settlement Fund?

Post by Mag18Nus19 »

Understood. I'll give that a try again tomorrow. Thank you.
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