Reasons to own Vanguard ETFs over Admiral shares?

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shawn_lad
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Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 12:20 pm

I am looking at pros and cons of vanguard mutual funds (Admiral shares) vs corresponding ETFs in Vanguard account. After going through the boglehead wiki page, I can't find many pros for Vanguard ETFs over corresponding Admiral shares, e.g. when comparing VTI vs VTSAX, or VXUS vs VTIAX.

Am I missing something?

Vanguard ETF pros:
- can trade intraday - not important unless day trading?
- maybe can't buy within 30 day after sale(?) - why would one need to do this if not day-trading? Workaround: buy ETF if ever really want to do this and later sell ETF and buy mutual fund after 30 day passes.

Vanguard Admiral shares Mutual Fund pros:
- cost less to buy: no bid / ask spread
- less "care" needed to guess what limit order to place, etc.
- no premium/discount to NAV to worry about (when needing to sell, persistent discount may prevent sale at "fair" price for a while)
- fractional shares can be held thus investing all of your desired money as needed, instead of having misc leftovers
- can always convert to ETF form (but not vice versa) if needed

Same:
- tax efficiency: same for Vanguard ETFs and mutual funds
- trading costs: $0 for both at Vanguard
- expense ratios

stimulacra
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by stimulacra » Mon Jan 07, 2019 12:26 pm

For Vanguard funds, I see no reason to pick ETFs over Admiral shares.

I prefer Admiral shares because ETFs can encourage irrational or emotion based behavior if the market is having a volatile day and they can encourage speculation.

I only hold one ETF in my entire portfolio.

livesoft
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 12:31 pm

Yes, for the OP ETFs don't make sense. For others, like me, they make perfect sense. Of course, mutual funds make sense for me, too.

Just because the OP discounts intraday transactions does not mean that others discount them nor does it mean that only day traders need to do intraday transactions.

Just because a web site says the bid/ask spread is important, does not mean that it is important. It is totally insignificant for the shares that I want to own.

Just because a web site says premium/discount to NAV is important, does not mean that it is important. It is totally insignificant.

Suppose an investor placed an order this morning at 10 am for $100,000 worth of VTSAX, then at the end of today, they will have $100,000 worth of VTSAX. But suppose the investor placed an order this morning at 10 am for $100,000 worth of VTI, then at the end of today, they will probably have at least $101,000 worth of VTI. And that's despite any bid/ask spread and any premium/discount. And that's with no worrying about a limit order or market order.
Last edited by livesoft on Mon Jan 07, 2019 12:35 pm, edited 3 times in total.
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robertmcd
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by robertmcd » Mon Jan 07, 2019 12:33 pm

Easier tax loss harvesting from ETF to ETF

VTI-ITOT-SPTM-SCHB

VXUS-IXUS

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Svensk Anga
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Svensk Anga » Mon Jan 07, 2019 1:26 pm

easier tax-gain harvesting, i.e.

VXUS -> VXUS

with no change in allocation and nil time out of the market. Vanguard's trading restrictions won't allow that for mutual funds. Very handy if you have a year or ten with zero LTCG tax rate. Think early retirement, sabbatical, or UTMA.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by 02nz » Mon Jan 07, 2019 1:48 pm

Portability. I left Vanguard after they made a series of errors on my account. It was easier to move the shares out as ETFs so I converted. Some brokerages will let you hold Admiral shares but not buy them. Even where it's possible to buy Admiral shares, there's usually a fee. ETFs can be bought everywhere and often for no fee.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by MittensMoney » Mon Jan 07, 2019 1:56 pm

To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by car733 » Mon Jan 07, 2019 2:15 pm

robertmcd wrote:
Mon Jan 07, 2019 12:33 pm
Easier tax loss harvesting from ETF to ETF

VTI-ITOT-SPTM-SCHB

VXUS-IXUS
This. I would add SCHF to VXUS-IXUS tax loss harvesting group.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by edge » Mon Jan 07, 2019 2:22 pm

While generally true, the below does not apply to Vanguard funds. Vanguard mutual funds/corresponding ETFs are share classes, meaning that the ETF increases the tax efficiency of the mutual fund share class.
MittensMoney wrote:
Mon Jan 07, 2019 1:56 pm
To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency

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Earl Lemongrab
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Earl Lemongrab » Mon Jan 07, 2019 2:26 pm

Got to be 50 threads on this exact topic.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Pigeye Brewster » Mon Jan 07, 2019 2:30 pm

edge wrote:
Mon Jan 07, 2019 2:22 pm
While generally true, the below does not apply to Vanguard funds. Vanguard mutual funds/corresponding ETFs are share classes, meaning that the ETF increases the tax efficiency of the mutual fund share class.
MittensMoney wrote:
Mon Jan 07, 2019 1:56 pm
To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency
Details on p. 3 of this link.
http://www.vanguard.com/jumppage/intern ... NTLCCE.pdf
Tax advantage. Like other ETF providers, Vanguard can push low-cost-basis shares
out of the portfolio through the in-kind redemption process. Our patented share-class
system provides an additional benefit. To meet cash redemption requests from non-
ETF shareholders, Vanguard can sell high-cost-basis securities to generate a capital
loss. These losses offset any current taxable gains and, if not exhausted, can be
carried forward to offset future capital gains—a recycling that is not likely within
stand-alone ETFs. Theoretically, cash redemptions could trigger a gain instead of a
loss, however Vanguard’s deep tax-lot structure has allowed us to select high-costbasis
shares in both good markets and bad, resulting in a high degree of tax-efficiency.

livesoft
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 2:35 pm

Earl Lemongrab wrote:
Mon Jan 07, 2019 2:26 pm
Got to be 50 threads on this exact topic.
Yes, but everyone deserves to type up their reasons and draw a line in the sand. That turns out to be a good way to keep one focussed on their decision, dig in their heels, and to never change. In other words, I've never seen anyone who posted "What am I missing?" to ever change their mind.
Last edited by livesoft on Mon Jan 07, 2019 3:43 pm, edited 1 time in total.
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mega317
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by mega317 » Mon Jan 07, 2019 2:41 pm

livesoft wrote:
Mon Jan 07, 2019 2:35 pm
In other words, I've never seen anyone who posted "What am I missing?" to ever change their mind.
I imagine we see a biased sample. Some continue posting to argue, those that change their mind might be less likely to admit "defeat" and instead just stop posting. I do think there are a few "thanks" follow ups.

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shawn_lad
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 3:17 pm

livesoft wrote:
Mon Jan 07, 2019 12:31 pm
Just because a web site says the bid/ask spread is important, does not mean that it is important. It is totally insignificant for the shares that I want to own.

Just because a web site says premium/discount to NAV is important, does not mean that it is important. It is totally insignificant.
Yes, those are minor pros perhaps for such (traditionally) liquid investments. Can you quantify how "insignificant" these were during 2008-2009 crisis by any chance?
livesoft wrote: Suppose an investor placed an order this morning at 10 am for $100,000 worth of VTSAX, then at the end of today, they will have $100,000 worth of VTSAX. But suppose the investor placed an order this morning at 10 am for $100,000 worth of VTI, then at the end of today, they will probably have at least $101,000 worth of VTI. And that's despite any bid/ask spread and any premium/discount. And that's with no worrying about a limit order or market order.
With all due respect, by the same token it could have been worth $99k by the end of the day...

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shawn_lad
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 3:18 pm

MittensMoney wrote:
Mon Jan 07, 2019 1:56 pm
To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency
According to the link in the OP, this does not apply to Vanguard ETFs.

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shawn_lad
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 3:26 pm

robertmcd wrote:
Mon Jan 07, 2019 12:33 pm
Easier tax loss harvesting from ETF to ETF

VTI-ITOT-SPTM-SCHB

VXUS-IXUS
car733 wrote:
Mon Jan 07, 2019 2:15 pm
This. I would add SCHF to VXUS-IXUS tax loss harvesting group.
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?

Is it because I can sell ETF one minute and buy corresponding pairing ETF the next few minutes as opposed to doing MF "exchange" at the end of the day?

Is the main issue here that Vangard may not have a good enough pairings for VTI / VXUS among its $0-fee mutual funds?

I guess only other option would be to either buy a paired ETF with side funds if they were available around 4pm or if no such funds are available, buying matching ETF at next opening, which could be quite different than closing prices. I agree neither are great options.
Last edited by shawn_lad on Mon Jan 07, 2019 4:05 pm, edited 1 time in total.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by IlikeJackB » Mon Jan 07, 2019 3:28 pm

livesoft wrote:
Mon Jan 07, 2019 2:35 pm
Besides Mexico pays for all my ETF trades and bid/ask spreads.
L.O.L. :mrgreen:
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 3:46 pm

shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?
I don't think Vanguard limits TLHing of MF, so I don't really see a difference there anymore.

The tax-gain-harvesting is another matter and Vanguard doesn't seem to allow an exchange of a mutual fund back into itself which is basically trivial with an ETF.
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JustinR
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by JustinR » Mon Jan 07, 2019 4:10 pm

ETFs are easier to transfer between brokerages.

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shawn_lad
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 4:12 pm

livesoft wrote:
Mon Jan 07, 2019 3:46 pm
shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?
I don't think Vanguard limits TLHing of MF, so I don't really see a difference there anymore.

The tax-gain-harvesting is another matter and Vanguard doesn't seem to allow an exchange of a mutual fund back into itself which is basically trivial with an ETF.
Svensk Anga wrote:
Mon Jan 07, 2019 1:26 pm
easier tax-gain harvesting, i.e.

VXUS -> VXUS

with no change in allocation and nil time out of the market. Vanguard's trading restrictions won't allow that for mutual funds. Very handy if you have a year or ten with zero LTCG tax rate. Think early retirement, sabbatical, or UTMA.
Regarding tax-gain harvesting, I understand now. Thanks!

I guess a poor-man-workaround with MFs would be to buy similar but not same fund for 30 days and then switch back.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by JustinR » Mon Jan 07, 2019 4:57 pm

Wait, how is TLH easier with ETFs?

I would think it's way messier, considering you can't buy fractional ETFs?

You won't be out of the market at any point with MFs either so I don't see how that's a plus for ETFs.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by FOGU » Mon Jan 07, 2019 5:36 pm

livesoft wrote:
Mon Jan 07, 2019 12:31 pm

Suppose an investor placed an order this morning at 10 am for $100,000 worth of VTSAX, then at the end of today, they will have $100,000 worth of VTSAX. But suppose the investor placed an order this morning at 10 am for $100,000 worth of VTI, then at the end of today, they will probably have at least $101,000 worth of VTI. And that's despite any bid/ask spread and any premium/discount. And that's with no worrying about a limit order or market order.
OK, but on any given day couldn't the ETF investor just as easily have $99,000 by the closing bell?
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 5:50 pm

FOGU wrote:
Mon Jan 07, 2019 5:36 pm
OK, but on any given day couldn't the ETF investor just as easily have $99,000 by the closing bell?
No, because the market trend is up. This is the same argument to lump-sum as soon as you have the money and not to DCA. That 6 hour difference could make a huge difference.
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JimmyJammy
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by JimmyJammy » Mon Jan 07, 2019 5:54 pm

ETF advantage : you can buy/sell them intra-day. Mutual funds: must buy/sell at the closing bell.

Mutual fund advantage: you can set up automatic investments.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Horton » Mon Jan 07, 2019 6:06 pm

If you want to hold the Vanguard Total World Stock Index, it would be ideal to do it via the ETF because the expense ratio (0.10%) is lower than the mutual fund (0.19%).

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shawn_lad
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by shawn_lad » Mon Jan 07, 2019 6:11 pm

Horton wrote:
Mon Jan 07, 2019 6:06 pm
If you want to hold the Vanguard Total World Stock Index, it would be ideal to do it via the ETF because the expense ratio (0.10%) is lower than the mutual fund (0.19%).
That's a good observation. That's because VT does not have corresponding MF with Admiral shares (only with Investor shares). OP is about ETFs that have corresponding Admiral shares.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by GrowthSeeker » Mon Jan 07, 2019 6:22 pm

If you’re buying from another brokerage, the fee to buy mutual fund is probably higher than to buy an ETF.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by gmc4h232 » Mon Jan 07, 2019 6:23 pm

It is significantly easier to donate appreciated shares of Vanguard ETFs to charity than mutual funds. If I recall, I had to convert my admiral shares to the corresponding ETF class of share to even be able to donate them.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by H-Town » Mon Jan 07, 2019 6:38 pm

Pigeye Brewster wrote:
Mon Jan 07, 2019 2:30 pm
edge wrote:
Mon Jan 07, 2019 2:22 pm
While generally true, the below does not apply to Vanguard funds. Vanguard mutual funds/corresponding ETFs are share classes, meaning that the ETF increases the tax efficiency of the mutual fund share class.
MittensMoney wrote:
Mon Jan 07, 2019 1:56 pm
To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency
Details on p. 3 of this link.
http://www.vanguard.com/jumppage/intern ... NTLCCE.pdf
Tax advantage. Like other ETF providers, Vanguard can push low-cost-basis shares
out of the portfolio through the in-kind redemption process. Our patented share-class
system provides an additional benefit. To meet cash redemption requests from non-
ETF shareholders, Vanguard can sell high-cost-basis securities to generate a capital
loss. These losses offset any current taxable gains and, if not exhausted, can be
carried forward to offset future capital gains—a recycling that is not likely within
stand-alone ETFs. Theoretically, cash redemptions could trigger a gain instead of a
loss, however Vanguard’s deep tax-lot structure has allowed us to select high-costbasis
shares in both good markets and bad, resulting in a high degree of tax-efficiency.
It does not mean that Vanguard mutual funds absolutely have zero capital gain distribution. Let me give you an unlikely but not impossible scenario: a massive crash leading to 80% of fund owner want to redeem VFIAX (Vanguard S&P 500 fund), Vanguard fund manager will have to sell its position to get the cash to pay it to fund owner. And there's capital gain/loss distribution.

With ETF, you don't have capital gain distribution in such case of mass redemption. Get it? You probably don't have anybody else on the market to buy your ETF...

Still - if you're looking at VTSAX (Vanguard Total U.S. stock) and its EFT share VTI, there's pretty much the same under normal circumstance. It's up to your preference to choose mutual fund or ETF.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by epictetus » Mon Jan 07, 2019 6:45 pm

if you have a Vanguard account I think it makes perfect sense to hold a Vanguard mutual fund v. a Vanguard ETF.

If you don't have a Vanguard account, the ETF can be a nice option that allows you to buy a Vanguard product at a non-Vanguard brokerage.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Vulcan » Mon Jan 07, 2019 6:46 pm

shawn_lad wrote:
Mon Jan 07, 2019 6:11 pm
Horton wrote:
Mon Jan 07, 2019 6:06 pm
If you want to hold the Vanguard Total World Stock Index, it would be ideal to do it via the ETF because the expense ratio (0.10%) is lower than the mutual fund (0.19%).
That's a good observation. That's because VT does not have corresponding MF with Admiral shares (only with Investor shares).
This will change in about two weeks.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by lukestuckenhymer » Mon Jan 07, 2019 6:51 pm

Earl Lemongrab wrote:
Mon Jan 07, 2019 2:26 pm
Got to be 50 threads on this exact topic.
Exactly. There should be pinned topics for this, a TLH general thread, a SCV-tilt debate thread, an Ex-US allocation debate thread, a Bonds vs. CDs thread, Backdoor Roth IRA thread... Too many duplicates.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by bogglehead125 » Mon Jan 07, 2019 6:56 pm

livesoft wrote:
Mon Jan 07, 2019 12:31 pm
Suppose an investor placed an order this morning at 10 am for $100,000 worth of VTSAX, then at the end of today, they will have $100,000 worth of VTSAX. But suppose the investor placed an order this morning at 10 am for $100,000 worth of VTI, then at the end of today, they will probably have at least $101,000 worth of VTI. And that's despite any bid/ask spread and any premium/discount. And that's with no worrying about a limit order or market order.
You heard it here first, VTI probably goes up 1% per trading day (and probably goes up at least 1127% per year).

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by jhfenton » Mon Jan 07, 2019 7:07 pm

shawn_lad wrote:
Mon Jan 07, 2019 6:11 pm
Horton wrote:
Mon Jan 07, 2019 6:06 pm
If you want to hold the Vanguard Total World Stock Index, it would be ideal to do it via the ETF because the expense ratio (0.10%) is lower than the mutual fund (0.19%).
That's a good observation. That's because VT does not have corresponding MF with Admiral shares (only with Investor shares). OP is about ETFs that have corresponding Admiral shares.
As Vulcan said, that will probably change in two weeks. On November 19, Vanguard announced Admiral Shares for Total World and All-World ex-US Small Cap. They could launch as soon as 60 days from the filing, which is January 18.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Broken Man 1999 » Mon Jan 07, 2019 7:29 pm

Even Mr Bogle seems to be warming up to ETFs, according to this in his book Staying The Course, page 118-119:

"....While I have been deemed to be a principal detractor of ETFs (not without supporting evidence!), my views have been, and remain, far more nuanced: (1) I strongly support broadly based diversified index ETFs; (2) I don't care for narrowly focused and speculative ETFs; and (3) I believe that stock trading is ultimately the investor's enemy. I therefore conclude that only appropriate ETFs should be selected by investors. Then, they should be held for the long term........" (MY bold)

I like ETFs, and I'm using them exactly as Mr. Bogle suggests.

My reply isn't exactly what OP was asking about, but there are some who might believe Mr. Bogle is deadset against ETFS, and that just isn't so.

What amazes me is discovering (in his book) that he (Mr Bogle) could have been instrumental in giving investors another gem of a product, as the product was offered to him (Vanguard) first! What a miss! But, hey, his index pioneering is enough for carving his face on a "Financial" Mt. Rushmore, IMHO.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by FOGU » Mon Jan 07, 2019 8:16 pm

livesoft wrote:
Mon Jan 07, 2019 5:50 pm
FOGU wrote:
Mon Jan 07, 2019 5:36 pm
OK, but on any given day couldn't the ETF investor just as easily have $99,000 by the closing bell?
No, because the market trend is up. This is the same argument to lump-sum as soon as you have the money and not to DCA. That 6 hour difference could make a huge difference.
Not possible?

I've seen plenty of days in the last months where the market was in the green at 10am and in the red by closing time. I don't see how general market trends speak to what could happen on any given trading day.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 8:21 pm

I did not state it was not possible.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Northern Flicker » Mon Jan 07, 2019 9:02 pm

MittensMoney wrote:
Mon Jan 07, 2019 1:56 pm
To my knowledge, ETF's have a tax-based advantage over Mutual Funds. "The sale of securities within the mutual fund portfolio creates capital gains for the shareholders, even for shareholders who may have an unrealized loss on the overall mutual fund investment."

https://www.fidelity.com/learning-cente ... efficiency
That is true with Fidelity index funds, but major Vanguard index mutual funds have not distributed capital gains for a very long time.
Taking a break from Bogleheads.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Northern Flicker » Mon Jan 07, 2019 9:13 pm

robertmcd wrote:
Mon Jan 07, 2019 12:33 pm
Easier tax loss harvesting from ETF to ETF

VTI-ITOT-SPTM-SCHB

VXUS-IXUS
I consider this an advantage of mutual funds. You don’t have to have the cash sitting around for the purchase on the same day to avoid having to wait for 3-day settlement. Example: to TLH VTIAX exchange the shares to 80% VTMGX and 20% VEMAX (or whatever the market cap percentages are at the time of the exchange). This can happen at market close with zero time out of the market and no cash needed to facilitate the trade.

Mutual funds are easier to reinvest dividends automatically. If you later want ETFs, Vanguard will convert admiral shares to ETFs.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 9:21 pm

jalbert wrote:
Mon Jan 07, 2019 9:13 pm
I consider this an advantage of mutual funds. You don’t have to have the cash sitting around for the purchase on the same day to avoid having to wait for 3-day settlement.
There is no 3-day settlement time anymore. Plus one does not have to wait at all for funds to settle: Sell ETF_A shares, then immediately buy ETF_B shares. One does not need a margin account either unless one wants to Buy ETF_B first, then sell ETF_A (there would be no interest charged for that either).

Also ETFs can have distributions automatically re-invested as well. Mutual funds are not easier in that regard. They are the same.

So I am wondering what your statements meant and I certainly want to dispel with the myths and rumors.
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overthought
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by overthought » Mon Jan 07, 2019 9:59 pm

livesoft wrote:
Mon Jan 07, 2019 2:35 pm
I've never seen anyone who posted "What am I missing?" to ever change their mind.
I guess I'm weird... basically all of my "what am I missing" threads have ended with me changing my mind in light of what I learned.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by livesoft » Mon Jan 07, 2019 10:12 pm

overthought wrote:
Mon Jan 07, 2019 9:59 pm
livesoft wrote:
Mon Jan 07, 2019 2:35 pm
I've never seen anyone who posted "What am I missing?" to ever change their mind.
I guess I'm weird... basically all of my "what am I missing" threads have ended with me changing my mind in light of what I learned.
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F150HD
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by F150HD » Mon Jan 07, 2019 11:12 pm

Earl Lemongrab wrote:
Mon Jan 07, 2019 2:26 pm
Got to be 50 threads on this exact topic.
51 actually :/

Kinda makes ya crave a good Bitcoin thread.

MnD
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by MnD » Tue Jan 08, 2019 12:19 am

Typically way more expensive to purchase VG mutual fund shares at another brokerage versus VG ETF trades.
VG has great funds including ETF's, but many opt to hold assets elsewhere for numerous good reasons.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Northern Flicker » Tue Jan 08, 2019 12:25 am

livesoft wrote:
Mon Jan 07, 2019 9:21 pm
jalbert wrote:
Mon Jan 07, 2019 9:13 pm
I consider this an advantage of mutual funds. You don’t have to have the cash sitting around for the purchase on the same day to avoid having to wait for 3-day settlement.
There is no 3-day settlement time anymore. Plus one does not have to wait at all for funds to settle: Sell ETF_A shares, then immediately buy ETF_B shares. One does not need a margin account either unless one wants to Buy ETF_B first, then sell ETF_A (there would be no interest charged for that either).

Also ETFs can have distributions automatically re-invested as well. Mutual funds are not easier in that regard. They are the same.

So I am wondering what your statements meant and I certainly want to dispel with the myths and rumors.
Fair enough. It wasn’t that long ago when I last sold some ETF shares and had to wait for settlement for the funds to be available, but I see it was 2 days and not 3, which seems to have changed in March 2017. Unlike livesoft, I don’t trade very often.
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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by robertmcd » Tue Jan 08, 2019 12:13 pm

shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
robertmcd wrote:
Mon Jan 07, 2019 12:33 pm
Easier tax loss harvesting from ETF to ETF

VTI-ITOT-SPTM-SCHB

VXUS-IXUS
car733 wrote:
Mon Jan 07, 2019 2:15 pm
This. I would add SCHF to VXUS-IXUS tax loss harvesting group.
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?

Is it because I can sell ETF one minute and buy corresponding pairing ETF the next few minutes as opposed to doing MF "exchange" at the end of the day?

Is the main issue here that Vangard may not have a good enough pairings for VTI / VXUS among its $0-fee mutual funds?

I guess only other option would be to either buy a paired ETF with side funds if they were available around 4pm or if no such funds are available, buying matching ETF at next opening, which could be quite different than closing prices. I agree neither are great options.
It's because I don't want to hold non-vanguard mutual funds in taxable due to capital gains. And since the mutual fund is priced at the end of the day, I cannot sell it and immediately buy the replacement ETF with my credits like I can with ETF to ETF.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by car733 » Wed Jan 09, 2019 11:23 am

shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?
Compare doing a TLH transaction of VTSAX to SCHB and VTI to SCHB.
In my experience, with ETF you can do it immediately, with MF you need to wait.

You can argue that you can hold cash to do that type of transactions, but I would prefer not to.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by DaftInvestor » Wed Jan 09, 2019 11:35 am

car733 wrote:
Wed Jan 09, 2019 11:23 am
shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?
Compare doing a TLH transaction of VTSAX to SCHB and VTI to SCHB.
In my experience, with ETF you can do it immediately, with MF you need to wait.

You can argue that you can hold cash to do that type of transactions, but I would prefer not to.
You can TLH from VTSAX to VFIAX easily (and free of charge inside a Vanguard Fund or Brokerage account).

On a related note - I havne't looked at SCHB in a while but thought it was too similar to VTI to TLH with.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by car733 » Wed Jan 09, 2019 11:40 am

DaftInvestor wrote:
Wed Jan 09, 2019 11:35 am
You can TLH from VTSAX to VFIAX easily (and free of charge inside a Vanguard Fund or Brokerage account).
Sure, if your TLH strategy is only using Vanguard MFs, then MF is superior to ETF since you can do fractions.
If you want to use other funds, ETF is easier.

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Re: Reasons to own Vanguard ETFs over Admiral shares?

Post by Earl Lemongrab » Wed Jan 09, 2019 11:41 am

DaftInvestor wrote:
Wed Jan 09, 2019 11:35 am
car733 wrote:
Wed Jan 09, 2019 11:23 am
shawn_lad wrote:
Mon Jan 07, 2019 3:26 pm
Could you folks elaborate on how owning MF (over ETF) limits tax loss harvesting?
Compare doing a TLH transaction of VTSAX to SCHB and VTI to SCHB.
In my experience, with ETF you can do it immediately, with MF you need to wait.

You can argue that you can hold cash to do that type of transactions, but I would prefer not to.
You can TLH from VTSAX to VFIAX easily (and free of charge inside a Vanguard Fund or Brokerage account).
Yes, but that restricts you to only Vanguard funds, giving you fewer available swap pairs.
On a related note - I havne't looked at SCHB in a while but thought it was too similar to VTI to TLH with.
No one knows what makes funds substantially identical, as the IRS has produced no guidelines. VTI and SCHB follow different indexes, which many here feel makes them not SI. I believe that the fact that they are from different fund companies is sufficient, but many disagree with that.
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