Taxable Account - Vanguard Mutual Fund vs Equivalent ETF Tax Efficiency

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WhaleMan
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Joined: Sun Feb 10, 2019 9:26 pm

Taxable Account - Vanguard Mutual Fund vs Equivalent ETF Tax Efficiency

Post by WhaleMan » Sun Feb 10, 2019 9:38 pm

Simple question:

In a taxable vanguard account with a long term outlook, is there a significant yearly tax bill difference between Vanguard Index Mutual Fund vs equivalent ETF option?

I am aware theoretically the ETF should have no capital gain taxes until I sell. However, my natural inclination is towards the mutual funds as I am pretty vanilla and have no use for the active trading feature.

Anyone have both Vanguard Index MF and ETF in their account and can speak from actual experience?

Thanks!

mcraepat9
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Joined: Thu Jul 16, 2015 11:46 am

Re: Taxable Account - Vanguard Mutual Fund vs Equivalent ETF Tax Efficiency

Post by mcraepat9 » Mon Feb 11, 2019 2:03 am

No difference. If you want the trading features of ETFs use them. If not, use mutual funds. This is not worth your time to think about.
Amateur investors are not cool-headed logicians.

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jeffyscott
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Location: Wisconsin

Re: Taxable Account - Vanguard Mutual Fund vs Equivalent ETF Tax Efficiency

Post by jeffyscott » Mon Feb 11, 2019 10:41 am

Vanguard ETFs are structured as another share class of a mutual fund, like Admiral or Investor shares...the mutual fund shares benefit from the disposition of capital gains through ETF shares, making Vanguard funds with ETF share classes as efficient as an ETF.

https://www.bogleheads.org/wiki/ETFs_vs ... uard_funds
press on, regardless - John C. Bogle

Topic Author
WhaleMan
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Joined: Sun Feb 10, 2019 9:26 pm

Re: Taxable Account - Vanguard Mutual Fund vs Equivalent ETF Tax Efficiency

Post by WhaleMan » Mon Feb 11, 2019 10:16 pm

Thanks

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