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[Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]

Posted: Tue Jan 08, 2019 10:12 am
by zx14rr
Vanguard to stop accepting purchases in leveraged and inverse investments

Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes).

So, forget BDCL, MORL, MRRL, etc.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:17 am
by munemaker
zx14rr wrote:
Tue Jan 08, 2019 10:12 am
Vanguard to stop accepting purchases in leveraged and inverse investments

Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes).

So, forget BDCL, MORL, MRRL, etc.
Personally, I think that's a good thing.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:18 am
by ReformedSpender

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:20 am
by zx14rr
Why do you care what others do in managing their investments if it doesn't impact you?

Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 10:38 am
by JimmyJammy
[Thread merged into here, see below (next page) --admin LadyGeek]

Just received an email that says, "Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes)."

Does anyone have more details about this?

Does this include not being able to short any stock or ETF? Or does this just cover leveraged ETFS like SSO and SDS?

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:42 am
by jaguarpanther
zx14rr wrote:
Tue Jan 08, 2019 10:12 am
Vanguard to stop accepting purchases in leveraged and inverse investments

Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes).

So, forget BDCL, MORL, MRRL, etc.
This was a disappointing email to get from Vanguard for me as I use these (in limited manner). I understand most of their customers do not use them, as I assume most of their customers don't buy any non-vanguard ETF's or single stocks. Seems they are protecting people from a non-existent problem and only making it more difficult for those of us that want to keep a unified interface for our investments.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:54 am
by JonFromDimensionC137
There is no reason for a retail investor to ever touch these funds. They're absolute money pits. You're free to go open a brokerage account elsewhere and trade them, just like Vanguard is free to help customers avoid destructive decisions.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 10:56 am
by columbia
zx14rr wrote:
Tue Jan 08, 2019 10:20 am
Why do you care what others do in managing their investments if it doesn't impact you?
Is that directed at Vanguard? ;)

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:00 am
by ReformedSpender
JonFromDimensionC137 wrote:
Tue Jan 08, 2019 10:54 am
There is no reason for a retail investor to ever touch these funds. They're absolute money pits. You're free to go open a brokerage account elsewhere and trade them, just like Vanguard is free to help customers avoid destructive decisions.
Where is the line drawn? I personally know individuals that day trade using these products and do quite well. Would you be okay if these types of involuntary actions were made to certain index/mutual funds or individual stocks you are in at Vanguard because they too may be deemed socially irresponsible or risky?

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:04 am
by Nate79
I do not understand why Vanguard cares. Certainly it is not to protect the investor from risk because if they allow buying individual stocks already they are allowing significant risk of loss.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:05 am
by delamer
zx14rr wrote:
Tue Jan 08, 2019 10:12 am
Vanguard to stop accepting purchases in leveraged and inverse investments

Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes).

So, forget BDCL, MORL, MRRL, etc.
Not sure what the “more” refers to.

And maybe Vanguard wasn’t making enough money on these types of investments to justify dealing with the possible legal challenges by people who don’t understand how the investments work.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:06 am
by RadAudit
zx14rr wrote:
Tue Jan 08, 2019 10:20 am
Why do you care what others do in managing their investments if it doesn't impact you?
Personally, I don't care.

However, Vanguard may believe that these types of funds may be at odds with their mission if this opinion is correct.
... these types of investments aren't generally designed for a buy-and-hold strategy, even if the "hold" period covers only several days. Such funds aren't intended for investors who don't intend to actively monitor and manage their portfolios. These funds are riskier than alternatives that don't use leverage.
May be they just figured that trying "to give investors a fair shake", whatever that is, didn't include these types of funds.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:07 am
by onourway
zx14rr wrote:
Tue Jan 08, 2019 10:20 am
Why do you care what others do in managing their investments if it doesn't impact you?
If difficult-to-understand investments that are potentially damaging to investors were to become widely used, it could have an impact on the larger economy. People didn't care about sub-prime mortgages either, until they did.

Vanguard is a conservative brokerage. There are plenty of other brokerages that will continue to fill this need. I see no issue with it.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:13 am
by HueyLD
What does nanny state have anything to do with Vanguard's decision regarding their product offering?

In a free enterprise, a company is free to offer what it wants to offer and the customer is free to vote with his/her feet.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:17 am
by aristotelian
Nate79 wrote:
Tue Jan 08, 2019 11:04 am
I do not understand why Vanguard cares. Certainly it is not to protect the investor from risk because if they allow buying individual stocks already they are allowing significant risk of loss.
It could impact Vanguard if a bunch of investors get burned and then claim that Vanguard did not properly warn them about the risk, expense, or quality of these products.

It could also tarnish their brand to be associated with products they regard as not meeting their standards.

Probably the biggest impact is that they do not want to people trading products designed for day trading to take advantage of Vanguard's free ETF platform.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:19 am
by jhfenton
I would guess that it's a mix of two things. One, Vanguard knows that those products are not suitable for most of their customers. And two, they really don't want the kind of customer who uses them a lot. They are probably more trouble/expense than they are worth in terms of revenue.

I'm fine with that.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:20 am
by JamesSFO
My guess is actually it is to be able to make a clearer statement: all ETFs on our platform trade for free.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:21 am
by JW-Retired
zx14rr wrote:
Tue Jan 08, 2019 10:20 am
Why do you care what others do in managing their investments if it doesn't impact you?
I don't care if doesn't impact me, but I suspect it does in terms of Vanguard's costs. All the very frequent trading is surely way more costly for Vanguard then my handful of trades a year. We boring Bogleheads are probably heavily subsidizing this stuff.
JW

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:21 am
by barnaclebob
It is very understandable that Vanguard wants to protect retail investors from these funds since even an above average investor might not understand that these must be traded daily in many cases to get the advertised performance.

However, Vanguard allows options trading which isn't for the normal retail investor but you have to go through an application process first.

I wonder if they think the cost and logistics of a separate leveraged ETF application isn't worth the trouble.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:23 am
by columbia
I presume that they’ve seen an uptick in purchases of such instruments (especially with accounts being converted to brokerage status). That, however, doesn’t answer why they made them available in the first place.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:28 am
by JonFromDimensionC137
ReformedSpender wrote:
Tue Jan 08, 2019 11:00 am
JonFromDimensionC137 wrote:
Tue Jan 08, 2019 10:54 am
There is no reason for a retail investor to ever touch these funds. They're absolute money pits. You're free to go open a brokerage account elsewhere and trade them, just like Vanguard is free to help customers avoid destructive decisions.
Where is the line drawn? I personally know individuals that day trade using these products and do quite well. Would you be okay if these types of involuntary actions were made to certain index/mutual funds you are in at Vanguard?
Pretty easy to draw the line at products that are consistent with a long term investing philosophy as opposed to those meant to be bought and sold on the same day.

I'm glad you're friends have been successful thus far, but they're either only lucky over a small sample or are major exceptions. My money is on the former.

Re: Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 11:28 am
by HEDGEFUNDIE
Such paternalism from Vanguard. Will they ban options trading next? How about individual stocks?

This move will drive me (and many others) to Fidelity and E-Trade.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:36 am
by saintsfan342000
Nice to see an example of Vanguard not trying to grow its business.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:39 am
by Yooper16
Much as Bogleheads recommend having a personal investment plan and sticking to it or appropriately modifying as life changes--seems to me that Vanguard may be following their own corporate investment plan and sticking to it or appropriately modifying as the business changes.

You are free to use go to another brokerage if you show desire.

Ain't capitalism grand!

Re: Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 11:40 am
by JimmyJammy
TD Ameritrade is also excellent.

And Merrill Edge is good too - no commissions in my experience.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:52 am
by 2015
HueyLD wrote:
Tue Jan 08, 2019 11:13 am
What does nanny state have anything to do with Vanguard's decision regarding their product offering?

In a free enterprise, a company is free to offer what it wants to offer and the customer is free to vote with his/her feet.
Thank you!
I don't know what we'd do here if we didn't have these at least weekly bash Vanguard threads. People would much rather play victim and complain than take responsibility through action. Action would equal using the hands to electronically or otherwise leave VG versus using the mouth to whine. I agree with Brian Tracy: "Responsibility is the personal, social, and economic crisis of our day."

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:56 am
by HEDGEFUNDIE
JonFromDimensionC137 wrote:
Tue Jan 08, 2019 10:54 am
There is no reason for a retail investor to ever touch these funds. They're absolute money pits. You're free to go open a brokerage account elsewhere and trade them, just like Vanguard is free to help customers avoid destructive decisions.
Lifecycle investing is a legitimate strategy that uses leverage to smooth out risk. Leveraged ETFs are a cheaper and safer way of accessing leverage than margin.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 11:57 am
by AerialP
The term "nanny state" not only does not apply to Vanguard, it is very politically charged. Not cool here.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:03 pm
by pointyhairedboss
AerialP wrote:
Tue Jan 08, 2019 11:57 am
The term "nanny state" not only does not apply to Vanguard, it is very politically charged. Not cool here.
Disagree, this term is being used in an investment context, not a political context.

While some might not agree with poster's assertion, they knew what the poster was getting at. Its very obvious that there is nothing political here.

Re: Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 12:23 pm
by zx14rr
HEDGEFUNDIE wrote:
Tue Jan 08, 2019 11:28 am
Such paternalism from Vanguard. Will they ban options trading next? How about individual stocks?

This move will drive me (and many others) to Fidelity and E-Trade.
I agree and started a post about More Nanny State at Vanguard.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:25 pm
by alex_686
HEDGEFUNDIE wrote:
Tue Jan 08, 2019 11:56 am
Lifecycle investing is a legitimate strategy that uses leverage to smooth out risk. Leveraged ETFs are a cheaper and safer way of accessing leverage than margin.
No. Leveraged ETFs are for tactical used. Becase leverage ETFs rebalance daily, their returns are path dependent. Correlations decay to about nothing over a month.

I am against leveraged ETFs in most cases, but I can't figure out wht Vanguard would ban them.

Re: Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 12:28 pm
by JoMoney
I doubt that it relates to individual stocks, only to "funds" and ETNs.
Not surprising, as those funds are explicitly designed for day-trading, not long-term investment.
A frequent disclaimer in Vanguard's products:
"Do not invest with Vanguard if you are a market-timer."

Re: Vanguard to stop accepting leveraged and inverse investments??

Posted: Tue Jan 08, 2019 12:32 pm
by zx14rr
JoMoney wrote:
Tue Jan 08, 2019 12:28 pm
I doubt that it relates to individual stocks, only to "funds" and ETNs.
Not surprising, as those funds are explicitly designed for day-trading, not long-term investment.
A frequent disclaimer in Vanguard's products:
"Do not invest with Vanguard if you are a market-timer."
Market timing has nothing to do with it. I have purchased but never sold an exchange traded note. Leveraged ETNs are a way to achieve significant income and still maintain a balanced portfolio.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:35 pm
by EfficientInvestor
I can understand where Vanguard is coming from, but I generally wouldn't expect this king of action from a broker. That being said, I think buying and holding leveraged ETFs long term can be very powerful if used correctly. The way to do it is through a diversified approach. Something along the lines of 30-40% stock, 40-50% bonds (my preference is treasuries), and 10-15% gold. If leveraged ETFs had been around for the last 30 years, you could have constructed a portfolio that would have done very well. If you are skeptical, you can pull daily data from the indexes and calculate how these funds would have performed. I did this and pulled the daily data into Portfolio Visualizer and created my own ticker symbols for these simulated funds. Below are results from a backtest from Jan 1987 - Dec 2018 using data from the S&P 500, Long Term Treasuries, and Gold:

45% UPRO (3X S&P 500)
40% TMF (3X Long Term Treasury)
15% UGLD (3X Gold)

Jan 1987 - Dec 2018
CAGR = 21.3%
Max Drawdown = -49%

Over this same time period, the S&P 500 had a CAGR of 9.9% and a max drawdown of -51%. Despite the volatility drag that may have occurred in certain years, the leveraged ETF portfolio would have greatly outperformed the S&P 500 with a similar amount of drawdown risk. For what it's worth, the CAGR of the portfolio would have been closer to 30% had Nasdaq and Small Cap funds been used and max drawdown would have still been around -50%.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:39 pm
by HEDGEFUNDIE
alex_686 wrote:
Tue Jan 08, 2019 12:25 pm
HEDGEFUNDIE wrote:
Tue Jan 08, 2019 11:56 am
Lifecycle investing is a legitimate strategy that uses leverage to smooth out risk. Leveraged ETFs are a cheaper and safer way of accessing leverage than margin.
No. Leveraged ETFs are for tactical used. Becase leverage ETFs rebalance daily, their returns are path dependent. Correlations decay to about nothing over a month.

I am against leveraged ETFs in most cases, but I can't figure out wht Vanguard would ban them.
Come on, this statement is simply false. And it's easy to show.

Look at UPRO vs. SPY over this most recent downturn.

Since 9/1/18 SPY is down 12%, UPRO is down 35%.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:42 pm
by Doc
I don't understand how a broker could be allowed to ban a legitimately traded security. Could they also disallowed an ETF whose name begins with "Schwab"?

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:44 pm
by BigMoneyNoWhammies
jhfenton wrote:
Tue Jan 08, 2019 11:19 am
I would guess that it's a mix of two things. One, Vanguard knows that those products are not suitable for most of their customers. And two, they really don't want the kind of customer who uses them a lot. They are probably more trouble/expense than they are worth in terms of revenue.

I'm fine with that.
Except that there are plenty of people on this board who utilize such investment instruments in small portions of their portfolio and are Vanguard customers. It isn't Vanguard's responsibility to babysit their investors and tell them where it is and isn't safe for them to place their money; that's incumbent upon the person putting their money in. Caveat emptor. If the market demand for the product is there, they should offer it.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:44 pm
by HEDGEFUNDIE
EfficientInvestor wrote:
Tue Jan 08, 2019 12:35 pm
I can understand where Vanguard is coming from, but I generally wouldn't expect this king of action from a broker. That being said, I think buying and holding leveraged ETFs long term can be very powerful if used correctly. The way to do it is through a diversified approach. Something along the lines of 30-40% stock, 40-50% bonds (my preference is treasuries), and 10-15% gold. If leveraged ETFs had been around for the last 30 years, you could have constructed a portfolio that would have done very well. If you are skeptical, you can pull daily data from the indexes and calculate how these funds would have performed. I did this and pulled the daily data into Portfolio Visualizer and created my own ticker symbols for these simulated funds. Below are results from a backtest from Jan 1987 - Dec 2018 using data from the S&P 500, Long Term Treasuries, and Gold:

45% UPRO (3X S&P 500)
40% TMF (3X Long Term Treasury)
15% UGLD (3X Gold)

Jan 1987 - Dec 2018
CAGR = 21.3%
Max Drawdown = -49%

Over this same time period, the S&P 500 had a CAGR of 9.9% and a max drawdown of -51%. Despite the volatility drag that may have occurred in certain years, the leveraged ETF portfolio would have greatly outperformed the S&P 500 with a similar amount of drawdown risk. For what it's worth, the CAGR of the portfolio would have been closer to 30% had Nasdaq and Small Cap funds been used and max drawdown would have still been around -50%.
Nice example. Just curious, what value does holding gold add over long treasuries?

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 12:53 pm
by Doom&Gloom
*yawn*

Whether a brokerage offers that wouldn't affect my choice of where to do business at all. If it makes a difference to other investors, other brokerages will accommodate them.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 1:09 pm
by barnaclebob
Doc wrote:
Tue Jan 08, 2019 12:42 pm
I don't understand how a broker could be allowed to ban a legitimately traded security. Could they also disallowed an ETF whose name begins with "Schwab"?
Yes, they could.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 1:09 pm
by EfficientInvestor
HEDGEFUNDIE wrote:
Tue Jan 08, 2019 12:44 pm
Nice example. Just curious, what value does holding gold add over long treasuries?
I'm sure there are other threads discussing the pros/cons of the use of gold as a hedge against inflation or general safe-haven, but that is what it's there for. For a point of reference, my leveraged indexing philosophy is generally centered around applying leverage to Ray Dalio's All-Weather portfolio.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 1:28 pm
by nisiprius
Doc wrote:
Tue Jan 08, 2019 12:42 pm
I don't understand how a broker could be allowed to ban a legitimately traded security. Could they also disallowed an ETF whose name begins with "Schwab"?
Many brokerages do not offer many specific mutual funds from other companies, even if they are legitimately registered. For example, you cannot buy the world's oldest mutual fund, MFS Massachusetts Investors Trust, retail class A, MITTX, at Vanguard. At one time, yes, you could; not now. Meanwhile, Vanguard mutual funds are "banned" at Morgan Stanley.

It seems to me that "nanny state" behavior would be to require all brokerages to offer all securities. And

And most if not all brokerages exercise discrimination by making selected funds and selected ETFs available without fees, but not the rest. If it's OK for TD Ameritrade to drop all Vanguard ETFs from its "no-fee" list, which they did in 2017, why wouldn't it be OK for a broker to drop an ETF completely?

I don't see any obvious way to find out whether all brokerages offer all ETFs currently. Just a random query: this looks odd to me, but I no longer have a Fidelity account; could someone with a Fidelity account and a little bit of nerve try to buy EQWS, carrying it up to the actual "buy" button and say for sure whether you can buy EQWS at Fidelity?

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 1:34 pm
by Whakamole
I agree that this move had more to do with making all ETFs on Vanguard's platform transaction cost-free, since these funds were excluded in the initial list and likely led to some confusion. I think they were excluded simply because they are meant to be held very short-term, and so if used "by design" would increase costs for Vanguard.
BigMoneyNoWhammies wrote:
Tue Jan 08, 2019 12:44 pm
Except that there are plenty of people on this board who utilize such investment instruments in small portions of their portfolio and are Vanguard customers. It isn't Vanguard's responsibility to babysit their investors and tell them where it is and isn't safe for them to place their money; that's incumbent upon the person putting their money in. Caveat emptor. If the market demand for the product is there, they should offer it.
The other problem with any kind of "babysitting" is that investors may begin to expect babysitting. For instance, you can place an order for OTC BB (pink sheet) securities using Vanguard Brokerage (though it has to be a limit order.) If/when someone loses money, are they going to complain, saying that they expected Vanguard to protect them from lousy investments since they removed leveraged/inverse funds?

Not to mention that 90% (maybe more) of the ETFs that are transaction cost-free at Vanguard aren't particularly good investments for the vast majority of investors - [just scrolling through the list](https://personal.vanguard.com/pdf/etfcfl.pdf) shows ETFs that focus on fertilizer, uranium, individual frontier markets like Vietnam, etc. I have no evidence but I'm guessing that those funds attract frequent traders just as much as the leveraged/inverse funds did.
nisiprius wrote:
Tue Jan 08, 2019 1:28 pm
I don't see any obvious way to find out whether all brokerages offer all ETFs currently. Just a random query: this looks odd to me, but I no longer have a Fidelity account; could someone with a Fidelity account and a little bit of nerve try to buy EQWS, carrying it up to the actual "buy" button and say for sure whether you can buy EQWS at Fidelity?
Gives me an error: "Error:(DB0002) This security is restricted from online opening trades or restricted to closing trades only. For more information please contact a Fidelity representative at 800-544-6666."

Re: More Nanny State From Vanguad

Posted: Tue Jan 08, 2019 1:37 pm
by Dottie57
If these funds are more suited to day trading wouldn’t this cost Vanguard more? If true, this is a good reason to disallow.

Re: More Nanny State From Vanguad

Posted: Tue Jan 08, 2019 1:46 pm
by Whakamole
Dottie57 wrote:
Tue Jan 08, 2019 1:37 pm
If these funds are more suited to day trading wouldn’t this cost Vanguard more? If true, this is a good reason to disallow.
Not just suited, intended to be for day trading. But since they fell under stock commission rates, I don't think it would cost Vanguard much - the only free trades given out are to Flagship customers, and 100 free trades (for Flagship Plus customers) are noise to how much trades a typical day trader would be placing.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 1:51 pm
by Munir
pointyhairedboss wrote:
Tue Jan 08, 2019 12:03 pm
AerialP wrote:
Tue Jan 08, 2019 11:57 am
The term "nanny state" not only does not apply to Vanguard, it is very politically charged. Not cool here.
Disagree, this term is being used in an investment context, not a political context.

While some might not agree with poster's assertion, they knew what the poster was getting at. Its very obvious that there is nothing political here.
"Nanny state" is clearly a pejorative political expression since it includes the word "state". Whoever used it could have said nanny organization instead.

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 2:00 pm
by jhfenton
JamesSFO wrote:
Tue Jan 08, 2019 11:20 am
My guess is actually it is to be able to make a clearer statement: all ETFs on our platform trade for free.
+1 After you suggested this, I am inclined to agree. It will simplify their marketing statements.

It's the right thing to do

Posted: Tue Jan 08, 2019 2:05 pm
by Taylor Larimore
zx14rr wrote:
Tue Jan 08, 2019 10:12 am
Vanguard to stop accepting purchases in leveraged and inverse investments

Beginning January 22, Vanguard will no longer accept purchases in leveraged or inverse mutual funds, ETFs (exchange-traded funds), or ETNs (exchange-traded notes).

So, forget BDCL, MORL, MRRL, etc.
zx14rr:

Thank you for the alert:

I read the Vanguard article and applaud their decision--to no longer sell leveraged and inverse mutual funds which are risky and unsuitable for most investors.

Best wishes
Taylor

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 2:06 pm
by aristotelian
jhfenton wrote:
Tue Jan 08, 2019 2:00 pm
JamesSFO wrote:
Tue Jan 08, 2019 11:20 am
My guess is actually it is to be able to make a clearer statement: all ETFs on our platform trade for free.
+1 After you suggested this, I am inclined to agree. It will simplify their marketing statements.
Exactly. And, "You can trade standard ETF's for free, but you are not going to use our free platform for specialty funds designed for day trading".

Re: More Nanny State From Vanguard

Posted: Tue Jan 08, 2019 2:09 pm
by criticalmass
ReformedSpender wrote:
Tue Jan 08, 2019 11:00 am
JonFromDimensionC137 wrote:
Tue Jan 08, 2019 10:54 am
There is no reason for a retail investor to ever touch these funds. They're absolute money pits. You're free to go open a brokerage account elsewhere and trade them, just like Vanguard is free to help customers avoid destructive decisions.
Where is the line drawn?
It appears that the line is drawn in front of leveraged or inverse mutual [*] funds purchased through Vanguard, just as you can't buy cigarettes at CVS. Vanguard isn't preventing you from going elsewhere to buy these money pits; there is no nanny state at all. In fact, all or most of ETFs you can buy through Vanguard are free of brokerage fees. I'll stick with Vanguard for most investments, but there are plenty other brokerage options that anyone may choose from.