Does Vanguard charge Rebalancing fees?

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thethinker
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Does Vanguard charge Rebalancing fees?

Post by thethinker » Thu Apr 17, 2014 9:26 pm

I cannot find any information on the website and hoping someone here might have an answer. It is my understanding that moving from one Vanguard Index fund to another is done so without any charges or fees. So if I wanted to sell $1,000 from the Vanguard US Total Stock Market Fund and with that same money buy the Vanguard International Total Stock Market Fund, I would not be charged extra costs --- is that correct?

If this is correct, does anyone know how often I can do this buy/sell within Vanguard Index Funds? I cannot imagine they would let me do this daily.
thank you.

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Taylor Larimore
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Re: Does Vanguard charge Rebalancing fees?

Post by Taylor Larimore » Thu Apr 17, 2014 9:30 pm

thethinker wrote:I cannot find any information on the website and hoping someone here might have an answer. It is my understanding that moving from one Vanguard Index fund to another is done so without any charges or fees. So if I wanted to sell $1,000 from the Vanguard US Total Stock Market Fund and with that same money buy the Vanguard International Total Stock Market Fund, I would not be charged extra costs --- is that correct?

If this is correct, does anyone know how often I can do this buy/sell within Vanguard Index Funds? I cannot imagine they would let me do this daily.
thank you.
thethinker:

Vanguard Mutual Fund Fees and Minimums

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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joe8d
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Re: Does Vanguard charge Rebalancing fees?

Post by joe8d » Thu Apr 17, 2014 9:31 pm

So if I wanted to sell $1,000 from the Vanguard US Total Stock Market Fund and with that same money buy the Vanguard International Total Stock Market Fund, I would not be charged extra costs --- is that correct?
Yes.
If this is correct, does anyone know how often I can do this buy/sell within Vanguard Index Funds? I cannot imagine they would let me do this daily.
No. you would be subject to frequent trading restrictions
All the Best, | Joe

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Re: Does Vanguard charge Rebalancing fees?

Post by LadyGeek » Thu Apr 17, 2014 9:38 pm

This thread is now in the Investing - Theory, News & General forum (investing question).
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thethinker
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Re: Does Vanguard charge Rebalancing fees?

Post by thethinker » Thu Apr 17, 2014 9:42 pm

Taylor Larimore wrote:
thethinker wrote:I cannot find any information on the website and hoping someone here might have an answer. It is my understanding that moving from one Vanguard Index fund to another is done so without any charges or fees. So if I wanted to sell $1,000 from the Vanguard US Total Stock Market Fund and with that same money buy the Vanguard International Total Stock Market Fund, I would not be charged extra costs --- is that correct?

If this is correct, does anyone know how often I can do this buy/sell within Vanguard Index Funds? I cannot imagine they would let me do this daily.
thank you.
thethinker:

Vanguard Mutual Fund Fees and Minimums

Best wishes.
Taylor
thanks taylor!

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thethinker
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Re: Does Vanguard charge Rebalancing fees?

Post by thethinker » Thu Apr 17, 2014 9:43 pm

joe8d wrote: No. you would be subject to frequent trading restrictions
would you be able to please tell me a bit more about the specific scheduling frequency which is restricted or available for free please?

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Taylor Larimore
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Vanguard Frequent Trading Policy

Post by Taylor Larimore » Thu Apr 17, 2014 9:44 pm

Thethinker:

I found this:
Vanguard advocates a long-term investing approach. We prefer to safeguard our long-term shareholders from subsidizing frequent transaction activity by others.

Our frequent-trading policy restricts fund investors from making rapid out-and-back round trips. It prohibits shareholders who redeem or exchange any amount out of a Vanguard mutual fund from purchasing or exchanging, by telephone or online, back into the same fund for 60 calendar days. The rule is designed to ensure that investors think long-term while still allowing them to effectively manage their assets.

Money market funds and most short-term bond funds are excluded from the policy, and redemptions are always allowed. (Exchange-traded fund shares, or ETFs, are unaffected as these are traded through brokerages.)

A handful of our more than 180 funds—those that operate in markets with high transaction costs—also have purchase or redemption fees or both. These fees are paid into the funds, not to Vanguard, and are generally intended to protect the majority of shareholders from absorbing the costs of a few.
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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thethinker
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Re: Does Vanguard charge Rebalancing fees?

Post by thethinker » Thu Apr 17, 2014 9:45 pm

LadyGeek wrote:This thread is now in the Investing - Theory, News & General forum (investing question).

I wasn't sure if this was technically a Theory question which is why I selected the other forum topic. Sorry for the mix up LadyGeek and thank you for the correction.

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Re: Does Vanguard charge Rebalancing fees?

Post by sscritic » Thu Apr 17, 2014 10:06 pm

thethinker wrote:
joe8d wrote: No. you would be subject to frequent trading restrictions
would you be able to please tell me a bit more about the specific scheduling frequency which is restricted or available for free please?
The SEC requires that you read a prospectus before buying a fund. Vanguard will send you one in the mail or you can read one on the web if you consent to electronic delivery, thus freeing Vanguard of the requirement to mail it to you. You will find your answers in the prospectus. The prospectus is free.

Edit: I lie. The SEC requires that Vanguard sends you a prospectus. However, they can't make you read it.

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pjstack
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Re: Does Vanguard charge Rebalancing fees?

Post by pjstack » Thu Apr 17, 2014 11:28 pm

Of course, there are taxes involved if you sell a fund (in taxable accounts, not IRA's).
pjstack

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JamesSFO
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Re: Does Vanguard charge Rebalancing fees?

Post by JamesSFO » Thu Apr 17, 2014 11:38 pm

thethinker wrote:I cannot find any information on the website and hoping someone here might have an answer. It is my understanding that moving from one Vanguard Index fund to another is done so without any charges or fees. So if I wanted to sell $1,000 from the Vanguard US Total Stock Market Fund and with that same money buy the Vanguard International Total Stock Market Fund, I would not be charged extra costs --- is that correct?

If this is correct, does anyone know how often I can do this buy/sell within Vanguard Index Funds? I cannot imagine they would let me do this daily.
thank you.
If you plan to trade more than about 1x every 60 days like this you will want to look into the ETFs. Once you do a sale of a fund you won't be able to do most purchases of that fund for 60 days. That said, overall there are no special "rebalancing" fees though some funds may have purchase or redemption fees. Again, if you plan to trade/rebalance frequently, just go with the ETF classes and you can trade mid-day as often as you like.

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Re: Does Vanguard charge Rebalancing fees?

Post by dratkinson » Fri Apr 18, 2014 12:15 am

Exceptions to Vanguard's FTP are made for (1) USPS purchases and for (2) automatic transactions.

Or you could just rebalance with new money.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.

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Re: Does Vanguard charge Rebalancing fees?

Post by Leeraar » Fri Apr 18, 2014 3:41 am

I had this conversation with Vanguard recently.

If there is a transaction that is not allowed because of a recent trade, you can write to them and explain that you are rebalancing. They will then allow it.

I believe I even saw this explained on their web site.

L.
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wander
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Re: Does Vanguard charge Rebalancing fees?

Post by wander » Fri Apr 18, 2014 5:36 am

You can re-balance with Vanguard ETFs with fees. But, if it is in taxable account then it's the tax (not fee) is what you need to worry about.

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JamesSFO
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Re: Does Vanguard charge Rebalancing fees?

Post by JamesSFO » Fri Apr 18, 2014 7:26 am

wander wrote:You can re-balance with Vanguard ETFs with fees...
What fees? If you hold VG ETFs at VG there are no trading fees to buy/sell?

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SpringMan
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Re: Does Vanguard charge Rebalancing fees?

Post by SpringMan » Fri Apr 18, 2014 8:41 am

The frequent trading rule is applied per account, meaning you are only locked out for 60 days (30 days if done by mail) from repurchasing the same fund in the same account, not all accounts. As mentioned above, one can use Vanguard ETFs to avoid the rule. I do not object to the rule, at least there is no redemption fees based on not holding a Vanguard fund long enough like Fidelity and others use with their mutual funds.
Best Wishes, SpringMan

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wander
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Re: Does Vanguard charge Rebalancing fees?

Post by wander » Fri Apr 18, 2014 9:07 am

JamesSFO wrote:What fees? If you hold VG ETFs at VG there are no trading fees to buy/sell?
Good catch. I didn't know trading ETF was free at VG. I used other discount broker to trade all ETFs and stocks for free. I think it used to be free, then they changed.

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Re: Does Vanguard charge Rebalancing fees?

Post by sscritic » Fri Apr 18, 2014 9:16 am

SpringMan wrote:The frequent trading rule is applied per account, meaning you are only locked out for 60 days (30 days if done by mail) from repurchasing the same fund in the same account, not all accounts.
I don't see the 30 day rule in my prospectus. You may be thinking of tax loss harvesting and the wash sale rules. You do want to watch for 30 days when selling at a loss and rebuying, but that is not a rule enforced by Vanguard. Is there another 30 day rule that Vanguard has?

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Re: Does Vanguard charge Rebalancing fees?

Post by SpringMan » Fri Apr 18, 2014 9:46 am

sscritic wrote:
SpringMan wrote:The frequent trading rule is applied per account, meaning you are only locked out for 60 days (30 days if done by mail) from repurchasing the same fund in the same account, not all accounts.
I don't see the 30 day rule in my prospectus. You may be thinking of tax loss harvesting and the wash sale rules. You do want to watch for 30 days when selling at a loss and rebuying, but that is not a rule enforced by Vanguard. Is there another 30 day rule that Vanguard has?
https://personal.vanguard.com/us/faces/ ... ontent.jsp

If you sell or exchange shares of a Vanguard fund, you will not be permitted to buy or exchange back into the same fund, in the same account, within 60 calendar days. However, this rule does not apply to:

Vanguard money market and short-term bond funds.
Vanguard ETF® Shares.
Transaction requests submitted by mail to Vanguard from shareholders who hold their accounts directly with Vanguard or through a Vanguard brokerage account. (Transaction requests submitted by fax, if otherwise permitted, are subject to the limitations.)
Transactions made through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
Sales of shares by Vanguard to pay fund or account fees.
Transfers and re-registrations of shares within the same fund.
Purchases of shares by asset transfer or direct rollover.
Conversions of shares from one share class to another in the same fund.
Sales of shares through checkwriting.
Section 529 college savings plans, certain approved institutional portfolios and asset allocation programs, as well as trades made by Vanguard funds that invest in other Vanguard funds. (Please note that shareholders of Vanguard's funds of funds are subject to this policy.)
Edit:
Actually I don't see anything regarding 30 days, 30 days probably stuck in my mind because the topic came up wrt wash sales.
Best Wishes, SpringMan

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Re: Does Vanguard charge Rebalancing fees?

Post by bobbun » Fri Apr 18, 2014 2:23 pm

SpringMan wrote:The frequent trading rule is applied per account, meaning you are only locked out for 60 days (30 days if done by mail) from repurchasing the same fund in the same account, not all accounts. As mentioned above, one can use Vanguard ETFs to avoid the rule. I do not object to the rule, at least there is no redemption fees based on not holding a Vanguard fund long enough like Fidelity and others use with their mutual funds.
Vanguard ETF's have a different rule:
If you buy and sell the same Vanguard ETF in a Vanguard Brokerage account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through your Vanguard Brokerage account for 60 days.
I'm not sure from that language if that's twenty-five transactions or twenty-five round trips, but either way it's quite a bit. It's also not immediately obvious if the counter resets after the 60 days, or if the first trade in the post-60 day period that is still within the same year re-triggers the wait. I would never trade that much, but if I did one concern would be spreads eating into my earnings--something that doesn't directly apply on buying and selling Vanguard funds at Vanguard. Twenty five is not the same as unlimited in any case.

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