Do you prefer etfs or mutual funds?

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Bama12
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Re: Do you prefer etfs or mutual funds?

Post by Bama12 »

I buy both.
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asset_chaos
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Re: Do you prefer etfs or mutual funds?

Post by asset_chaos »

I prefer low cost, diversified investments. Whichever wrapper allows me to conveniently assemble my preferred portfolio of low cost, diversified investments is the one I use.
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02nz
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Re: Do you prefer etfs or mutual funds?

Post by 02nz »

I prefer ETFs since they're more portable. When Vanguard made a bunch of errors, I said enough and converted to ETFs so that I could hold them almost anywhere (and get a bonus, too, although that wasn't the main reason).

I do dislike the inability to buy fractional shares (with some exceptions) though.
JustinR
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Re: Do you prefer etfs or mutual funds?

Post by JustinR »

I like buying with mutual funds for the fractional shares.

Then converting them to etfs for the lower costs. Also, you can only move them to other brokerages as etfs.
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lock.that.stock
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Re: Do you prefer etfs or mutual funds?

Post by lock.that.stock »

They’re both essentially the same thing. I have yet to see a calculation on the differences in tax efficiencies between the two. Likely tax efficiencies are very similar but everyone has an opinion on which one is more tax efficient with no calculation/evidence to substantiate it. I prefer ETFs for their DRIPs. Keeps all the dividend payouts in my account reinvested without transaction fees or my involvement. Doesn’t get any more passive than that.
zeal
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Re: Do you prefer etfs or mutual funds?

Post by zeal »

Mutual funds for me, mainly because I choose simplicity and I don't really understand ETFs. Also, I like that I can buy fractional shares so that all of the cash I have allocated toward investing is actually invested. And another thing, tax is of little-to-no-consequence to me since all of my investments are tax-sheltered at this point. I'm 31 and see a long time before I need these funds, so I'll make my aggressive investment choices based on asset allocation, not asset subclass.
ChrisO
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Re: Do you prefer etfs or mutual funds?

Post by ChrisO »

Most the the arguments against ETfs are living in the past. :oops: :oops: With new brokerages like M1 finance and other's popping up, ETFs are nearly very similar to mutual funds. You can buy fractional shares of ETFs now not just whole shares, you can get automatic investments, and 0 commission fees. The main PRO with 0 commission ETFs you can buy vanguard, ishares, Schawb, Spdr, WisdomTree, etc. in one place without having to open an account just a vanguard for vanguard funds, etc.

Note this is not an endorsement for M1 Finance, I'm just giving examples of how the investment industry is changing for the better. Most 401ks are locked into funds so for IRAs and taxable accounts pick what you like.
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ruralavalon
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Re: Do you prefer etfs or mutual funds?

Post by ruralavalon »

I prefer traditional mutual funds to exchange traded funds (ETFs) for the simpler trading mechanics, and the easy automatic reinvestment of dividends and gains. Not planning to move to a different brokerage, so portability means nothing to me.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
simpleguy123
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Vanguard Admiral shares vs ETF expense ratios

Post by simpleguy123 »

[Thread merged into here, see below. --admin LadyGeek]

I am surprised to see that admiral shares have higher expense ratio compared to ETF ( VTSAX .04 vs 0.03 ). Same for International too.
I have >1M worth of VTSAX and Total International and realized that although not much but still worth saving a few hundred $.
Does it make sense to just convert admiral shares to ETF?
I can leave some VTSAX around to do periodic auto investment but convert bulk to ETF which seems more flexible when I need to dispose off in retirement as you can pick/control the intra-day price.

I believe there is no tax implication but may have to call Vanguard to convert these. Also I assume the purchase lot info will be carried on to help in TLH if needed in future.
Is my understanding correct.

Thanks a lot !!
averagedude
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by averagedude »

At Vanguard, the only cost saving between admiral shares and ETF's is the expense ratio. At a 1 basis point difference in the asset class you mention, I don't think it really matters, and this is coming from someone that will happily pick up a nickel that is laying on the ground. I personally choose funds over ETF's unless the savings is over several basis points. I like the fact that their is no bid/ask spread and I don't have to wonder if the NAV is accurately priced.
mega317
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by mega317 »

Well you can't really pick the price. I'd like to sell my VTI for $500 a share today.

It doesn't seem like something I will want to worry about in retirement.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
retired@50
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by retired@50 »

simpleguy123 wrote: Sat Feb 22, 2020 10:55 pm I am surprised to see that admiral shares have higher expense ratio compared to ETF ( VTSAX .04 vs 0.03 ). Same for International too.
I have >1M worth of VTSAX and Total International and realized that although not much but still worth saving a few hundred $.
Does it make sense to just convert admiral shares to ETF?
I can leave some VTSAX around to do periodic auto investment but convert bulk to ETF which seems more flexible when I need to dispose off in retirement as you can pick/control the intra-day price.

I believe there is no tax implication but may have to call Vanguard to convert these. Also I assume the purchase lot info will be carried on to help in TLH if needed in future.
Is my understanding correct.

Thanks a lot !!
Allan Roth wrote an article on this very topic. See link.

Regards,

https://www.etf.com/sections/index-inve ... nopaging=1

https://finance.yahoo.com/news/converti ... 00184.html
This is one person's opinion. Nothing more.
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Eagle33
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by Eagle33 »

averagedude wrote: Sat Feb 22, 2020 11:09 pm At Vanguard, the only cost saving between admiral shares and ETF's is the expense ratio. At a 1 basis point difference in the asset class you mention, I don't think it really matters, and this is coming from someone that will happily pick up a nickel that is laying on the ground. I personally choose funds over ETF's unless the savings is over several basis points. I like the fact that their is no bid/ask spread and I don't have to wonder if the NAV is accurately priced.
Every $500 in an ETF saves a nickel in expenses. :greedy
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lexor
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by lexor »

Eagle33 wrote: Sun Feb 23, 2020 12:44 am
averagedude wrote: Sat Feb 22, 2020 11:09 pm At Vanguard, the only cost saving between admiral shares and ETF's is the expense ratio. At a 1 basis point difference in the asset class you mention, I don't think it really matters, and this is coming from someone that will happily pick up a nickel that is laying on the ground. I personally choose funds over ETF's unless the savings is over several basis points. I like the fact that their is no bid/ask spread and I don't have to wonder if the NAV is accurately priced.
Every $500 in an ETF saves a nickel in expenses. :greedy
I think people underestimate costs. I would consider VTSAX to be expensive and overpriced. I mean, NTSX is only .09% higher and it's using futures to gain leverage!

Regarding, OP's question - I had an argument about this the other day and the answer is over a long time frame (30 years) .01% would save you 21k assuming 7% returns after inflation. To me, 21k is a lot of money.

Also... if it's in a tax exempt account then Fido would save you about 21*11 = 231k :shock: Saw OP mentions TLH
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -Mr. John C. Bogle
simpleguy123
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by simpleguy123 »

This came to my notice as the Vanguard PAS recommended ETF instead of admiral and I curiously asked. I was told because of the cost difference.
Granted it is not much but if saves a few thousand $ over 20-30 year just for the cost of a phone call. From the link, it does seem the cost basis is maintained so don't see any reason not to do it. I am talking about a portfolio of $3-4M.
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ruralavalon
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by ruralavalon »

simpleguy123 wrote: Sat Feb 22, 2020 10:55 pm I am surprised to see that admiral shares have higher expense ratio compared to ETF ( VTSAX .04 vs 0.03 ). Same for International too.
I have >1M worth of VTSAX and Total International and realized that although not much but still worth saving a few hundred $.
Does it make sense to just convert admiral shares to ETF?
I can leave some VTSAX around to do periodic auto investment but convert bulk to ETF which seems more flexible when I need to dispose off in retirement as you can pick/control the intra-day price.

I believe there is no tax implication but may have to call Vanguard to convert these. Also I assume the purchase lot info will be carried on to help in TLH if needed in future.
Is my understanding correct.

Thanks a lot !!
An expense ratio difference of 0.01% saves you $100 annually on a one million dollar investment.

At age 50 retiring in 5-10 years the expense ratio savings is meaningless in my opinion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
simpleguy123
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by simpleguy123 »

ruralavalon wrote: Sun Feb 23, 2020 12:57 pm
simpleguy123 wrote: Sat Feb 22, 2020 10:55 pm I am surprised to see that admiral shares have higher expense ratio compared to ETF ( VTSAX .04 vs 0.03 ). Same for International too.
I have >1M worth of VTSAX and Total International and realized that although not much but still worth saving a few hundred $.
Does it make sense to just convert admiral shares to ETF?
I can leave some VTSAX around to do periodic auto investment but convert bulk to ETF which seems more flexible when I need to dispose off in retirement as you can pick/control the intra-day price.

I believe there is no tax implication but may have to call Vanguard to convert these. Also I assume the purchase lot info will be carried on to help in TLH if needed in future.
Is my understanding correct.

Thanks a lot !!
An expense ratio difference of 0.01% saves you $100 annually on a one million dollar investment.

At age 50 retiring in 5-10 years the expense ratio savings is meaningless in my opinion.

The question is is there any drawback of converting to ETF? What do I have to lose other than probably 10 min phone call to Vanguard? If I want to sell these I can still simulate MF by selling few minutes before closing to get same sell price. Perhaps I am missing something??
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LadyGeek
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Re: Do you prefer etfs or mutual funds?

Post by LadyGeek »

I merged MnD's and simpleguy123's threads into a similar discussion.
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fortyofforty
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by fortyofforty »

simpleguy123 wrote: Sun Feb 23, 2020 3:00 pm
ruralavalon wrote: Sun Feb 23, 2020 12:57 pm
simpleguy123 wrote: Sat Feb 22, 2020 10:55 pm I am surprised to see that admiral shares have higher expense ratio compared to ETF ( VTSAX .04 vs 0.03 ). Same for International too.
I have >1M worth of VTSAX and Total International and realized that although not much but still worth saving a few hundred $.
Does it make sense to just convert admiral shares to ETF?
I can leave some VTSAX around to do periodic auto investment but convert bulk to ETF which seems more flexible when I need to dispose off in retirement as you can pick/control the intra-day price.

I believe there is no tax implication but may have to call Vanguard to convert these. Also I assume the purchase lot info will be carried on to help in TLH if needed in future.
Is my understanding correct.

Thanks a lot !!
An expense ratio difference of 0.01% saves you $100 annually on a one million dollar investment.

At age 50 retiring in 5-10 years the expense ratio savings is meaningless in my opinion.

The question is is there any drawback of converting to ETF? What do I have to lose other than probably 10 min phone call to Vanguard? If I want to sell these I can still simulate MF by selling few minutes before closing to get same sell price. Perhaps I am missing something??
The only real downside to ETFs, in my opinion, is that you cannot invest in dollar amounts, just in whole-share quantities. If you are used to investing, say, $6,000 for an IRA, you will have to figure out how many shares that is, then buy that amount, leaving some residual in your Federal Money Market settlement fund earning next to nothing.
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wander
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by wander »

fortyofforty wrote: Sun Feb 23, 2020 6:23 pm The only real downside to ETFs, in my opinion, is that you cannot invest in dollar amounts, just in whole-share quantities. If you are used to investing, say, $6,000 for an IRA, you will have to figure out how many shares that is, then buy that amount, leaving some residual in your Federal Money Market settlement fund earning next to nothing.
Fidelity Investments has announced real-time fractional share trading for stocks and ETFs. That means investors can build their portfolios with dollar amounts they want to invest or have available regardless of how much a share of a stock or an ETF costs.
fortyofforty
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Re: Vanguard Admiral shares vs ETF expense ratios

Post by fortyofforty »

wander wrote: Sun Feb 23, 2020 6:33 pm
fortyofforty wrote: Sun Feb 23, 2020 6:23 pm The only real downside to ETFs, in my opinion, is that you cannot invest in dollar amounts, just in whole-share quantities. If you are used to investing, say, $6,000 for an IRA, you will have to figure out how many shares that is, then buy that amount, leaving some residual in your Federal Money Market settlement fund earning next to nothing.
Fidelity Investments has announced real-time fractional share trading for stocks and ETFs. That means investors can build their portfolios with dollar amounts they want to invest or have available regardless of how much a share of a stock or an ETF costs.
Yes, and I hope Vanguard catches up. They haven't, as of now, so I'm sticking with my answer. In the Fidoheads forum, they don't have the same issue.
alex_686
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Re: Do you prefer etfs or mutual funds?

Post by alex_686 »

AlexisAtEasternState wrote: Thu Nov 08, 2018 7:04 pm I prefer mutual funds in tax advantaged accounts because there is no 2 day delay in reinvesting dividends.
What 2 day delay? Says the former mutual fund accountant who had a fair amount of operational experience in this area.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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