Vanguard Advertising Mutual Fund to ETF Conversion

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Vulcan
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Vulcan » Wed Jun 26, 2019 6:50 pm

Silence Dogood wrote:
Wed Jun 26, 2019 6:45 pm
Vulcan wrote:
Wed Jun 26, 2019 5:41 pm
As for 2FA, I stand by my suggestion in the thread you linked: use Google Voice number for receiving authentication texts.
A good suggestion, but clients shouldn't have to come up with a work-around for bad security practices. Wouldn't you agree?
Several loud media stories notwithstanding, SIM swap is a highly unlikely vector to be successfully exploited, however, I've been using GV for many years before 2FA became even a thing (since it was called Grand Central), so it's been an easy choice for me personally.

And so long as we are derailing:), I think Vanguard is doing the same thing pretty much everyone else in the industry is doing with phone-based verification.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

Lyrrad
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Lyrrad » Wed Jun 26, 2019 7:01 pm

Lucere wrote:
Wed Jun 26, 2019 1:41 pm

I can't post a link to the page, because it's secure once I log in. Here's a link to the image I see (the forum won't let me embed the image):

https://imgur.com/4QF7Daz
I don't think it was possible to convert online before, with a phone call was required to convert to ETFs. Where does the link in the banner go?

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southerndoc
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by southerndoc » Wed Jun 26, 2019 7:20 pm

Unfortunately, this isn't an option in their Individual 401(k) accounts.

bgreat
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by bgreat » Thu Jun 27, 2019 12:29 am

schooner wrote:
Wed Jun 26, 2019 4:24 pm
Bogle had plenty of issues with ETFs from the first time the idea was pitched to him in the 1990s. I'd say it was tepid acceptance with two major qualifications: 1) broad based index ETFs, and 2) minimal trading (speculation).

The available evidence shows the exact opposite: 1) there are thousands of ETFs, and 2) trading volume is off the charts.

Nothing wrong with that but I'm still confused about how you square that with Boglehead's investment philosophy?
So just because some people trade ETF's actively, I can't use them for a passive diversified portfolio? I really fail to see what your point is.

Some people trade bonds actively. So bonds can't be squared off with a "Boglehead" investment philosophy?

fennewaldaj
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by fennewaldaj » Thu Jun 27, 2019 12:48 am

I ended up with both the etf and admiral classes of FTSE all world ex US small cap and emerging markets. I keep meaning to call to convert but I hate calling people so I keep putting it off.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by AlohaJoe » Thu Jun 27, 2019 1:24 am

bgreat wrote:
Wed Jun 26, 2019 11:28 am
Lucere wrote:
Wed Jun 26, 2019 11:12 am
If you log on to Vanguard recently, the first thing you see is a screen pushing you to convert certain mutual funds (e.g., VTSAX) to their ETF equivalent (e.g., VTI). They're advertising lower ERs (e.g., .03 vs. .04) for the ETF versions, etc. Other than that, what advantage is there to convert to ETFs for the consumer? Similarly, what advantage is there for Vanguard, and why would they want to push this?
Cheaper to administer. With funds, the fund operator needs to track ownership and other bookkeeping, perform purchases/sales every day (i.e. more trading costs), etc. With ETF's: bookkeeping is done by the broker, trades are outsourced and probably happen less frequently (see e.g. the unit creation process for ETF's), etc.
I never understood this argument. ETFs aren't cheaper to administer. Who do you think the broker is? Vanguard. Who does all the trading? Vanguard. It just all gets done by Vanguard Brokerage Services instead of by whatever division does it for mutual funds.

If Vanguard had a pop-up telling people to transfer their asset to Charles Schwab then this line of argument might make sense to me. But that's not what they're doing.

mmcmonster
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by mmcmonster » Thu Jun 27, 2019 3:48 am

Since part of the expenses of the MF are a fixed cost, wouldn’t it make sense (as people move from the MF to the ETF) that the ER of the MF goes up?

Also, I would rather have a way to go from ETF to MF without changing my basis. :(

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fortyofforty
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by fortyofforty » Thu Jun 27, 2019 8:37 am

By having more AUM in ETFs, Vanguard ensures that more client money ends up in their Settlement Fund, at an ER of 0.11%. If everything is in mutual funds, far less is left floating around in a high expense ratio parking space. Not sure if this plays into the motivation, or if it's just the idea of pushing the latest and greatest financial products.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Lucere
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Lucere » Thu Jun 27, 2019 10:40 am

Lyrrad wrote:
Wed Jun 26, 2019 7:01 pm
Lucere wrote:
Wed Jun 26, 2019 1:41 pm

I can't post a link to the page, because it's secure once I log in. Here's a link to the image I see (the forum won't let me embed the image):

https://imgur.com/4QF7Daz
I don't think it was possible to convert online before, with a phone call was required to convert to ETFs. Where does the link in the banner go?
Interestingly, it's not showing me that screen anymore when I log in, and it won't come up when I search on "convert mutual fund to ETF" in their search engine. The closest I could find when I searched was a phone number.

When I clicked it before, it had a window that let you enter your mutual fund symbol to see if it could be converted to an ETF. I didn't go beyond that step, so I don't know what comes after that step online.

bgreat
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by bgreat » Thu Jun 27, 2019 11:21 am

AlohaJoe wrote:
Thu Jun 27, 2019 1:24 am
bgreat wrote:
Wed Jun 26, 2019 11:28 am
Lucere wrote:
Wed Jun 26, 2019 11:12 am
If you log on to Vanguard recently, the first thing you see is a screen pushing you to convert certain mutual funds (e.g., VTSAX) to their ETF equivalent (e.g., VTI). They're advertising lower ERs (e.g., .03 vs. .04) for the ETF versions, etc. Other than that, what advantage is there to convert to ETFs for the consumer? Similarly, what advantage is there for Vanguard, and why would they want to push this?
Cheaper to administer. With funds, the fund operator needs to track ownership and other bookkeeping, perform purchases/sales every day (i.e. more trading costs), etc. With ETF's: bookkeeping is done by the broker, trades are outsourced and probably happen less frequently (see e.g. the unit creation process for ETF's), etc.
I never understood this argument. ETFs aren't cheaper to administer. Who do you think the broker is? Vanguard. Who does all the trading? Vanguard. It just all gets done by Vanguard Brokerage Services instead of by whatever division does it for mutual funds.

If Vanguard had a pop-up telling people to transfer their asset to Charles Schwab then this line of argument might make sense to me. But that's not what they're doing.
Perhaps the bookeeping costs are exactly the same (personally I doubt it - but it's hard to find data). But you'll find that in fact a lot of Vanguard ETF's are already being bought elsewhere. ETF's being bought elsewhere means more AUM without Vanguard having to do much bookeeping for them.

But you also ignored the trading / unit creation process. Funds likely have to trade - in odd amounts - every day. ETF trading seems much more efficient. Again it's hard to find good data, but I imagine a large portion of TER is trading costs.

But now I ask you to explain why you think the ETF's could be cheaper? If you claim that MF's aren't more expensive to run than ETF's... are you insinuating Vanguard are making ETF's cheaper just for fun and to annoy people?

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by HeadKnocker » Thu Jun 27, 2019 11:59 am

Lets not forget with ETFs, you have more control over your order if you place a limit or stop order vs a market order on the buy side. I like that flexibility. It gives you the ability to buy during a dip in the market (assuming one occurs in the near future). On the sell side, you can limit your short-term losses during a correction if you are in to that sort of thing.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by jhfenton » Thu Jun 27, 2019 12:10 pm

Lucere wrote:
Thu Jun 27, 2019 10:40 am
Interestingly, it's not showing me that screen anymore when I log in, and it won't come up when I search on "convert mutual fund to ETF" in their search engine. The closest I could find when I searched was a phone number.

When I clicked it before, it had a window that let you enter your mutual fund symbol to see if it could be converted to an ETF. I didn't go beyond that step, so I don't know what comes after that step online.
I hope this means that they are bringing conversions online. I've always had to call to convert to the ETF share class. Being able to do it online would be fantastic.

At the moment, I don't see the option anywhere.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Thu Jun 27, 2019 5:12 pm

HeadKnocker wrote:
Thu Jun 27, 2019 11:59 am
Lets not forget with ETFs, you have more control over your order if you place a limit or stop order vs a market order on the buy side. I like that flexibility. It gives you the ability to buy during a dip in the market (assuming one occurs in the near future). On the sell side, you can limit your short-term losses during a correction if you are in to that sort of thing.
Isn't this market-timing?

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by TropikThunder » Thu Jun 27, 2019 11:07 pm

fortyofforty wrote:
Thu Jun 27, 2019 8:37 am
By having more AUM in ETFs, Vanguard ensures that more client money ends up in their Settlement Fund, at an ER of 0.11%. If everything is in mutual funds, far less is left floating around in a high expense ratio parking space. Not sure if this plays into the motivation, or if it's just the idea of pushing the latest and greatest financial products.
How much money do you think that is? I have $5.06 in my settlement fund from my last ETF purchase (at TDA, not at Vanguard, but my point is the same). And I don't think I've ever heard someone call a 0.11% ER "high expense".
Silence Dogood wrote:
Thu Jun 27, 2019 5:12 pm
HeadKnocker wrote:
Thu Jun 27, 2019 11:59 am
Lets not forget with ETFs, you have more control over your order if you place a limit or stop order vs a market order on the buy side. I like that flexibility. It gives you the ability to buy during a dip in the market (assuming one occurs in the near future). On the sell side, you can limit your short-term losses during a correction if you are in to that sort of thing.
Isn't this market-timing?
Mutual fund holders can buy on the dips too, it's not unique to ETF's.
jhfenton wrote:
Thu Jun 27, 2019 12:10 pm
Lucere wrote:
Thu Jun 27, 2019 10:40 am
Interestingly, it's not showing me that screen anymore when I log in, and it won't come up when I search on "convert mutual fund to ETF" in their search engine. The closest I could find when I searched was a phone number.

When I clicked it before, it had a window that let you enter your mutual fund symbol to see if it could be converted to an ETF. I didn't go beyond that step, so I don't know what comes after that step online.
I hope this means that they are bringing conversions online. I've always had to call to convert to the ETF share class. Being able to do it online would be fantastic.

At the moment, I don't see the option anywhere.
Most likely just that Vanguard is monitoring this thread and disabled the pop-up on OP's account page. :P

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by TropikThunder » Thu Jun 27, 2019 11:13 pm

AlohaJoe wrote:
Thu Jun 27, 2019 1:24 am
I never understood this argument. ETFs aren't cheaper to administer. Who do you think the broker is? Vanguard. Who does all the trading? Vanguard. It just all gets done by Vanguard Brokerage Services instead of by whatever division does it for mutual funds.
I think the main cost-savings is that when you or I buy or sell a mutual fund at Vanguard, Vanguard has to process both sides of the transaction. If buys and sells balance they don't need to transact any of the underlying stocks though. When you or I buy or sell an ETF, however, that's a transaction directly between two individuals that Vanguard may or may not have any part in, especially if the Vanguard ETF is held at another brokerage. If I hold VTI at Merrill Edge and sell some, does Vanguard have anything to do with it?

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by AlohaJoe » Fri Jun 28, 2019 12:58 am

TropikThunder wrote:
Thu Jun 27, 2019 11:13 pm
AlohaJoe wrote:
Thu Jun 27, 2019 1:24 am
I never understood this argument. ETFs aren't cheaper to administer. Who do you think the broker is? Vanguard. Who does all the trading? Vanguard. It just all gets done by Vanguard Brokerage Services instead of by whatever division does it for mutual funds.
I think the main cost-savings is that when you or I buy or sell a mutual fund at Vanguard, Vanguard has to process both sides of the transaction.
This is true but I'd expect that to cost less than $0.02 for VTI at $149.03 since that's what Authorized Participants are trading for and still making a profit. That amounts to 0.013 basis points. At Vanguard's scale that's still a lot of money so maybe that's what they're caring about.
When you or I buy or sell an ETF, however, that's a transaction directly between two individuals that Vanguard may or may not have any part in, especially if the Vanguard ETF is held at another brokerage. If I hold VTI at Merrill Edge and sell some, does Vanguard have anything to do with it?
Vanguard is absolutely involved since this entire thread is about Vanguard telling people to hold ETFs at Vanguard. Vanguard is NOT saying "go hold your ETFs at Merrill Lynch so we save money". In particular, why would Vanguard care about saving money. The funds are run at-cost.

Unless there's some theory that ETFs allow Vanguard to run things ABOVE cost, meaning more profit for the executives to pay out to themselves in bonuses?

I guess it is just when I "follow the money" I can't quite figure out what the alleged story is.

arf30
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by arf30 » Fri Jun 28, 2019 6:18 am

My guess would be that since these mutual funds hold ETFs, Vanguard pays the ETF costs + the small additional cost of the mutual fund wrapper. However until ETFs are as convenient to buy (I auto buy directly from my bank account in any dollar amount) I'm not sure how many people will be switching.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Fri Jun 28, 2019 8:00 am

AlohaJoe wrote:
Fri Jun 28, 2019 12:58 am
Vanguard is absolutely involved since this entire thread is about Vanguard telling people to hold ETFs at Vanguard. Vanguard is NOT saying "go hold your ETFs at Merrill Lynch so we save money". In particular, why would Vanguard care about saving money. The funds are run at-cost.
Employee compensation (the "Vanguard Partnership Plan").

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Fri Jun 28, 2019 8:04 am

TropikThunder wrote:
Thu Jun 27, 2019 11:07 pm
Silence Dogood wrote:
Thu Jun 27, 2019 5:12 pm
HeadKnocker wrote:
Thu Jun 27, 2019 11:59 am
Lets not forget with ETFs, you have more control over your order if you place a limit or stop order vs a market order on the buy side. I like that flexibility. It gives you the ability to buy during a dip in the market (assuming one occurs in the near future). On the sell side, you can limit your short-term losses during a correction if you are in to that sort of thing.
Isn't this market-timing?
Mutual fund holders can buy on the dips too, it's not unique to ETF's.
To be clear, I never stated that it's not possible to market-time with mutual funds.

However, HeadKnocker seems to be stating that it's easier to market-time with ETFs.

Not only that, but he seems to be stating that the ability to market-time more easily is a benefit of ETFs.
Last edited by Silence Dogood on Fri Jun 28, 2019 8:14 am, edited 1 time in total.

anon_investor
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by anon_investor » Fri Jun 28, 2019 8:13 am

I got this annoying popup (but only after I saw this thread!)... Mutual funds are better for my buy and hold investment strategy. The fact that every last penny can be invested makes mutual funds better than ETFs for me, which trumps the current 1 basis point difference in expense ratio. If I ever want to do tax loss harvesting in the future, only then would ETFs make any sense for me.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by fortyofforty » Fri Jun 28, 2019 8:16 am

TropikThunder wrote:
Thu Jun 27, 2019 11:07 pm
fortyofforty wrote:
Thu Jun 27, 2019 8:37 am
By having more AUM in ETFs, Vanguard ensures that more client money ends up in their Settlement Fund, at an ER of 0.11%. If everything is in mutual funds, far less is left floating around in a high expense ratio parking space. Not sure if this plays into the motivation, or if it's just the idea of pushing the latest and greatest financial products.
How much money do you think that is? I have $5.06 in my settlement fund from my last ETF purchase (at TDA, not at Vanguard, but my point is the same). And I don't think I've ever heard someone call a 0.11% ER "high expense".
0.11% is higher than 0.05% or 0.03%, isn't it? More than double, by my calculation. I have a little in the SF, too. But there are many investors who move money around, buy and sell ETFs, and constantly have money sloshing around in their SFs. A thousand here and a thousand there and pretty soon we're talking about real money.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

renue74
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by renue74 » Fri Jun 28, 2019 8:38 am

Earlier this month I had inquired about brokerage transfer bonuses here. It looks like some of them are quiet lucrative.

I've worked to simplify our portfolio and get most of it into Vanguard mutual funds. Actually, I have no issues with their website. So I'm not unhappy with their site or customer service because we simply don't deal directly with Vanguard very much. Monthly, I'll purchase or exchange fund shares and never had issues.

But...I'm told that to take advantage of these transfer bonuses, it would be easier to convert to ETFs and then do the transfers.

I'm not sure the reduced ER is really worth it.

Like others here, I really like that I can just go in and buy $XXXX worth of mutual funds and be done with it.

I'm still on the fence about trying out the transfer bonus game. But, if I do...I will definitely switch to ETFs.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by JackoC » Fri Jun 28, 2019 9:58 am

renue74 wrote:
Fri Jun 28, 2019 8:38 am
Earlier this month I had inquired about brokerage transfer bonuses here. It looks like some of them are quiet lucrative.

I've worked to simplify our portfolio and get most of it into Vanguard mutual funds. Actually, I have no issues with their website. So I'm not unhappy with their site or customer service because we simply don't deal directly with Vanguard very much. Monthly, I'll purchase or exchange fund shares and never had issues.

But...I'm told that to take advantage of these transfer bonuses, it would be easier to convert to ETFs and then do the transfers.

I'm not sure the reduced ER is really worth it.
Right, transfer bonuses might be another potential pro-ETF factor. I have a mix of MF and ETF, and shifted some ETF shares from Vanguard to Merrill recently to capture significant absolute $ bonuses. Big change to my long term returns? No, but 'the lure of easy money, it's gotta a very strong appeal' as someone once said. :happy Although I'm also not sure you couldn't do with with MF shares, maybe somebody else knows. I did do it in part with individual TIPS issues in IRA I shifted and that worked fine (in order to shift my whole Vang IRA account to Merrill and not increase the number of IRA accounts, on taxable side I accepted the Merrill account as additional thing to track).

I'll reiterate another that's not often mentioned: with ETF's you can borrow in an emergency against your stock position. With MF's you can't practically do that. That could allow you at the margin to keep less money in cash, which would dwarf the effect of a few $'s sitting around because you can only buy an integer number of ETF shares, or because you didn't bother to do the reinvesting trade at all for a couple of days. But again I'm retired, spending distributions, so the reinvest aspect is irrelevant to me. I accept that MF's ability to reinvest completely on autopilot is an advantage where that's needed.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by bgreat » Fri Jun 28, 2019 11:27 am

anon_investor wrote:
Fri Jun 28, 2019 8:13 am
I got this annoying popup (but only after I saw this thread!)... Mutual funds are better for my buy and hold investment strategy. The fact that every last penny can be invested makes mutual funds better than ETFs for me, which trumps the current 1 basis point difference in expense ratio. If I ever want to do tax loss harvesting in the future, only then would ETFs make any sense for me.
Let's do the maths on this, because honestly this last penny stuff is overrated and misleading. (If you really care about the last penny, then you could withdraw the difference to buy another unit from your emergency fund, and repay it the next investment cycle... It's a complete drop in the bucket.)


With ETF's, you'll have an average of something like $75 uninvested in the long-run (assuming e.g. VTI, currently trading at $150 - but most other ETF's such as VT seem lower - and then take half the trading price as the long-term uninvested amount, assuming you invest e.g. on a monthly or quarterly basis). Let's be optimistic, and take a 10% yearly return. [In reality my average uninvested money is lower, but that's because I have some SCV and split the world up into regions. My smallest holding trades at around $40, so I have an average of $20 uninvested over time.]

With 10% return, on tthat $75 you miss out on an average return of $7.50 per year. (But you can still earn interest, and those returns aren't realistic anyway, so the actual loss of return will be less than $7.50.)

One basis point per year costs you $7.50 on every 75k in assets invested.

For beginning investors, indeed, the last penny factor trumps the 1 basis point (not taking into account that you could save just as much by drinking 1-2 fewer coffees per year). For most people here, I doubt that this is the case.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by anon_investor » Fri Jun 28, 2019 12:43 pm

bgreat wrote:
Fri Jun 28, 2019 11:27 am
Let's do the maths on this, because honestly this last penny stuff is overrated and misleading. (If you really care about the last penny, then you could withdraw the difference to buy another unit from your emergency fund, and repay it the next investment cycle... It's a complete drop in the bucket.)


With ETF's, you'll have an average of something like $75 uninvested in the long-run (assuming e.g. VTI, currently trading at $150 - but most other ETF's such as VT seem lower - and then take half the trading price as the long-term uninvested amount, assuming you invest e.g. on a monthly or quarterly basis). Let's be optimistic, and take a 10% yearly return. [In reality my average uninvested money is lower, but that's because I have some SCV and split the world up into regions. My smallest holding trades at around $40, so I have an average of $20 uninvested over time.]

With 10% return, on tthat $75 you miss out on an average return of $7.50 per year. (But you can still earn interest, and those returns aren't realistic anyway, so the actual loss of return will be less than $7.50.)

One basis point per year costs you $7.50 on every 75k in assets invested.

For beginning investors, indeed, the last penny factor trumps the 1 basis point (not taking into account that you could save just as much by drinking 1-2 fewer coffees per year). For most people here, I doubt that this is the case.
True, didn't think of it that way. Maybe another way to do it is to hold the bulk of the portfolio in ETFs, and a small amount in mutual funds, to get every last penny and convert to ETFs periodically?

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vineviz
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by vineviz » Fri Jun 28, 2019 1:19 pm

anon_investor wrote:
Fri Jun 28, 2019 12:43 pm
True, didn't think of it that way. Maybe another way to do it is to hold the bulk of the portfolio in ETFs, and a small amount in mutual funds, to get every last penny and convert to ETFs periodically?
Or just not worry about the pennies and spend your time doing something worth more than $7.50 per year?

I'm being serious: there's a point at which obsessing over the very last penny becomes about something other than investment goals. Which can be okay, obviously, so long as it doesn't devolve into counterproductivity.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Lucere
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Lucere » Fri Jun 28, 2019 1:31 pm

TropikThunder wrote:
Thu Jun 27, 2019 11:07 pm
jhfenton wrote:
Thu Jun 27, 2019 12:10 pm
Lucere wrote:
Thu Jun 27, 2019 10:40 am
Interestingly, it's not showing me that screen anymore when I log in, and it won't come up when I search on "convert mutual fund to ETF" in their search engine. The closest I could find when I searched was a phone number.

When I clicked it before, it had a window that let you enter your mutual fund symbol to see if it could be converted to an ETF. I didn't go beyond that step, so I don't know what comes after that step online.
I hope this means that they are bringing conversions online. I've always had to call to convert to the ETF share class. Being able to do it online would be fantastic.

At the moment, I don't see the option anywhere.
Most likely just that Vanguard is monitoring this thread and disabled the pop-up on OP's account page. :P
Haha. Yeah, but they replaced it with this email I just got:

1/2: https://imgur.com/IfWb4tn

2/2: https://imgur.com/pEq7WxP

I'm sure many others here will disagree, but two separate "Log on to convert now" buttons in one email seems pushy to the point of desperate to me.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by alex_686 » Fri Jun 28, 2019 1:41 pm

AlohaJoe wrote:
Thu Jun 27, 2019 1:24 am
I never understood this argument. ETFs aren't cheaper to administer. Who do you think the broker is? Vanguard. Who does all the trading? Vanguard. It just all gets done by Vanguard Brokerage Services instead of by whatever division does it for mutual funds.
I have worked operations of both mutual funds and brokerage. ETFs are cheaper. Yeah, most of the functions are the same, but tge broker side is slightly cheaper. For example pricing. Mutual funds must pay accountants to precisely price their funds every afternoon, and then have to pay to distribute those prices. Brokers just pull the last trade from the tape. Buying a pricing feed is much cheaper.

Granted, this is not much, but I can think of dozens of different examples.

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changingtimes
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by changingtimes » Fri Jun 28, 2019 2:45 pm

I got the e-mail, the pop-up and this big thing on my main screen after closing the pop-up:

Image

Note the "convert online now".

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by stan1 » Fri Jun 28, 2019 2:47 pm

changingtimes wrote:
Fri Jun 28, 2019 2:45 pm
I got the e-mail, the pop-up and this big thing on my main screen after closing the pop-up:

Image

Note the "convert online now".
Do you have a legacy mutual fund account or a modern brokerage account?

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changingtimes
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by changingtimes » Fri Jun 28, 2019 2:56 pm

stan1 wrote:
Fri Jun 28, 2019 2:47 pm

Do you have a legacy mutual fund account or a modern brokerage account?
Everything is now brokerage accounts, though a few of my accounts were converted from the old mutual funds only.

This is what I get when I click on Convert Now:

Image

ETA: When I click on Convert Now, the only option I get is for VTSAX->VTI in my Roth. (I also own VTSAX in my after-tax brokerage account.)

My Roth might be the only account that began its life as a brokerage and not MF account.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by stan1 » Fri Jun 28, 2019 3:02 pm

changingtimes wrote:
Fri Jun 28, 2019 2:56 pm

This is what I get when I click on Convert Now:

Image
That's new. They must be rolling it out a little at a time. I don't have that yet for my two mutual funds in a taxable account.

Make sure you record your cost basis before you click convert in a taxable account.

Hopefully they've automated that part of the process to reduce the number of errors created in the past. Or, maybe that's why it is limited to Roths so they don't have to worry cost basis errors in taxable accounts that were converted from brokerage accounts (or were old VBS accounts).

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by changingtimes » Fri Jun 28, 2019 3:05 pm

stan1 wrote:
Fri Jun 28, 2019 3:02 pm

That's new. They must be rolling it out a little at a time. I don't have that yet for my two mutual funds in a taxable account.

Make sure you record your cost basis before you click convert in a taxable account.

Hopefully they've automated that part of the process to reduce the number of errors created in the past.
I added onto that previous post that they're only showing one option for me to convert right now, and that's the VTSAX in my Roth. I also own VTSAX in my after-tax brokerage account, but it's not an option.

My Roth did begin its life as a brokerage account, whereas my after-tax account was originally a MF account, then converted.

I also have two IRAs, but neither have any of the initial funds being offered.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by fortyofforty » Fri Jun 28, 2019 3:14 pm

vineviz wrote:
Fri Jun 28, 2019 1:19 pm
anon_investor wrote:
Fri Jun 28, 2019 12:43 pm
True, didn't think of it that way. Maybe another way to do it is to hold the bulk of the portfolio in ETFs, and a small amount in mutual funds, to get every last penny and convert to ETFs periodically?
Or just not worry about the pennies and spend your time doing something worth more than $7.50 per year?

I'm being serious: there's a point at which obsessing over the very last penny becomes about something other than investment goals. Which can be okay, obviously, so long as it doesn't devolve into counterproductivity.
Or we could go back to obsessing over 0.01% or 0.02% differences in expense ratios. That seems to be acceptable sport for Bogleheads. :beer
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Lucere
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Lucere » Fri Jun 28, 2019 4:14 pm

changingtimes wrote:
Fri Jun 28, 2019 2:56 pm
stan1 wrote:
Fri Jun 28, 2019 2:47 pm

Do you have a legacy mutual fund account or a modern brokerage account?
Everything is now brokerage accounts, though a few of my accounts were converted from the old mutual funds only.

This is what I get when I click on Convert Now:

Image

ETA: When I click on Convert Now, the only option I get is for VTSAX->VTI in my Roth. (I also own VTSAX in my after-tax brokerage account.)

My Roth might be the only account that began its life as a brokerage and not MF account.
This is in line with my situation (i.e., VTSAX in a Roth), although mine started as a MF account and was later converted to a brokerage account.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Trader Joe » Fri Jun 28, 2019 4:22 pm

Lucere wrote:
Wed Jun 26, 2019 11:12 am
If you log on to Vanguard recently, the first thing you see is a screen pushing you to convert certain mutual funds (e.g., VTSAX) to their ETF equivalent (e.g., VTI). They're advertising lower ERs (e.g., .03 vs. .04) for the ETF versions, etc. Other than that, what advantage is there to convert to ETFs for the consumer? Similarly, what advantage is there for Vanguard, and why would they want to push this?
Thank you very much for this information. I have not seen this pop-up. If I do I will take the time to file a formal customer complaint. I have zero interest in any investment vehicle at Vanguard other than mutual funds.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by drk » Fri Jun 28, 2019 10:34 pm

Vanguard sent me an email inviting me to convert today. I had been meaning to convert before, but their limited customer service hours made me have to plan to call them, and I never did. With the update to allow conversion online via the web UI, I could do it when I wanted. This is great.

quantAndHold
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by quantAndHold » Fri Jun 28, 2019 11:04 pm

Honestly, people. Get a grip.

When I login to my account, I get pop ups asking me if I want to go paperless. Vanguard clearly has an agenda, to save money on postage. Since I don’t want to go paperless, should I file a complaint about that?

There are things in this world that are important. This isn’t one of them.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Sat Jun 29, 2019 12:30 am

Vulcan wrote:
Wed Jun 26, 2019 6:50 pm
Several loud media stories notwithstanding, SIM swap is a highly unlikely vector to be successfully exploited, however, I've been using GV for many years before 2FA became even a thing (since it was called Grand Central), so it's been an easy choice for me personally.
Why bother offering a hardware-token (Yubikey) based two-factor authentication if SMS is still going to be available as an optional backup?

That just doesn't make sense. People who opt for the Yubikey get absolutely no improvement in security (and actually get an infinitesimal decrease in security).
Vulcan wrote:
Wed Jun 26, 2019 6:50 pm
And so long as we are derailing:), I think Vanguard is doing the same thing pretty much everyone else in the industry is doing with phone-based verification.
True, but the industry has got it wrong.

A security feature that Vanguard has that I particularly like is the option to "restrict account access from unrecognized devices" - which I think is a security feature unique to Vanguard. There is also the option to always require two-factor authentication when signing in, regardless of whether the device is recognized.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by southerndoc » Sat Jun 29, 2019 2:26 am

I see two problems with ETF's in retirement accounts when mutual funds are available:

1. Reinvesting your dividends becomes more tricky. Correct me if I'm wrong, but you can't purchase partial shares of ETF's like you can mutual funds. So you won't be able to as readily reinvest your dividends.

2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by alex_686 » Sat Jun 29, 2019 7:28 am

southerndoc wrote:
Sat Jun 29, 2019 2:26 am
2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.
Having actually struck a fund’s NAV I can tell you that you have it flipped. A ETF’s market price is almost always mote reflective of the market than the accountant’s estimation of the market price.

Regardless, ETFs are the future. I can talk all day on why manual transmission are best, but they are getting harder to find. Such is the tide of history.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Sat Jun 29, 2019 8:12 am

alex_686 wrote:
Sat Jun 29, 2019 7:28 am
Regardless, ETFs are the future. I can talk all day on why manual transmission are best, but they are getting harder to find. Such is the tide of history.
An interesting analogy.

I don't know how to drive a manual. Supposedly it's more fuel efficient? At least that's what I've been told is the advantage. I've also been told that it's easy to learn and that anyone can do it.

I think most people, however, just find automatic to be more convenient and don't want to bother learning "stick." I'm guessing automatic now dominates not because it was more efficient (it wasn't) but because it was easier and more convenient for the consumer.

Consumers chose convenience over efficiency because that's what was more important to them.

So are ETFs manual or automatic in your analogy?

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by DecumulatorDoc » Sat Jun 29, 2019 8:39 am

Sure wish Vanguard would come up with an ETF equivalent for VWEAX (Vanguard High-Yield Corporate Bond Admiral). I have it orphaned at E*Trade and can't add to positions unless I switch to higher expense of VWEHX (Investor Shares).

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by jhfenton » Sat Jun 29, 2019 9:04 am

southerndoc wrote:
Sat Jun 29, 2019 2:26 am
1. Reinvesting your dividends becomes more tricky. Correct me if I'm wrong, but you can't purchase partial shares of ETF's like you can mutual funds. So you won't be able to as readily reinvest your dividends.
There is a delay in reinvesting ETF dividends, but they can be fully reinvested in fractional shares if you sign up for automatic dividend reinvestment. For Vanguard ETFs, the delay is only a couple of days, during which time your dividends are out of the market. Mutual fund dividends are reinvested the same day that they go ex-dividend.

For some non-Vanguard ETFs, the delay between ex-dividend and payment date is longer. You also may not be able to reinvest dividends for lower asset non-Vanguard ETFs. For example, I still cannot reinvest dividends in EMGF/iShares Multifactor Emerging Markets ETF, even though it has $384MM in assets. There are probably not many Vanguard customers who own it. I've owned it since it was at $90MM, and I occasionally check to see if it is eligible.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by alex_686 » Sat Jun 29, 2019 9:07 am

Silence Dogood wrote:
Sat Jun 29, 2019 8:12 am
An interesting analogy.

...

So are ETFs manual or automatic in your analogy?
ETFs and automatics are the future.

For cars, automatic transmissions are more complex, more expensive to produce, more prone to breakdown, and more expensive to repair, and have lower gas millage. There is a fair amount of nuance that can be brought in. Automatics have made vast strides in 50 years and in some cases might even have better fuel millage.

For ETFs, they have a much cheaper cost structure that mutual funds. The industry - not just Vanguard - has a strong cost incentive to go down this road.

To extend the analogy a bit, transmissions are really expensive to design. Manufacturing processes become more reliable if you just produce a single transmission rather than 2. So you only offer a single standard transmission. Standard transmission used to mean manual, now it means automatic.

Closed end funds used to be a thing, and a few still hang out. It might take another 30 years for mutual funds to be phased out, but they are on their way out.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Broken Man 1999 » Sat Jun 29, 2019 9:15 am

southerndoc wrote:
Sat Jun 29, 2019 2:26 am
I see two problems with ETF's in retirement accounts when mutual funds are available:

1. Reinvesting your dividends becomes more tricky. Correct me if I'm wrong, but you can't purchase partial shares of ETF's like you can mutual funds. So you won't be able to as readily reinvest your dividends.

2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.

1. You are incorrect. ETF dividends can be used to buy whatever amount they will cover of an ETF share. This includes partial ETF shares.
The transaction below shows details of my Total Bond Market ETF dividend on 05/06/2019 of $205.64 purchasing full shares (2) and partial share (.5430) @ $80.57 / share.

05/06/2019 2.5430 $80.87 $205.64

2. Mutual funds are also subject to market prices of their holdings. However, they are only totaled up once a day after trading closes. ETFs are totaled up (priced) by the market as they are traded. One can set the price for up to 60 days they are willing to pay or the price they are willing to sell, or one can let the market price it for you. You control that pricing. With a mutual fund you will get the NAV after close for buying or selling.

I prefer ETFs, you prefer mutual funds. At the end of the day, do what you want. But, see, I don't have to wait until the end of the day, I can do what I want during the day! :D

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Silence Dogood » Sat Jun 29, 2019 9:49 am

alex_686 wrote:
Sat Jun 29, 2019 9:07 am
ETFs and automatics are the future.

For cars, automatic transmissions are more complex, more expensive to produce, more prone to breakdown, and more expensive to repair, and have lower gas millage. There is a fair amount of nuance that can be brought in. Automatics have made vast strides in 50 years and in some cases might even have better fuel millage.

For ETFs, they have a much cheaper cost structure that mutual funds. The industry - not just Vanguard - has a strong cost incentive to go down this road.

To extend the analogy a bit, transmissions are really expensive to design. Manufacturing processes become more reliable if you just produce a single transmission rather than 2. So you only offer a single standard transmission. Standard transmission used to mean manual, now it means automatic.

Closed end funds used to be a thing, and a few still hang out. It might take another 30 years for mutual funds to be phased out, but they are on their way out.
To me, it sounds like mutual funds are automatics in your analogy (less efficient, more convenient).

Perhaps mutual funds will be phased out someday, but I think the industry will need to make purchasing and selling them just as easy as purchasing and selling ETFs.

Right now, with Vanguard, I have my account set up to automatically contribute up to the maximum contribution limit into my Roth IRA on the first market day of the year (so, for example, on January 2nd of this year $6,000 was contributed). The amount is pulled directly from my bank account into the fund I invest in (a Vanguard Target Retirement fund) and the amount adjusts automatically if the maximum IRA contribution limit increases ($5,500 was contributed on January 2nd, 2018, $6,000 was contributed on January 2nd, 2019).

Is this possible to do with ETFs? I have set up accounts for others to work this way (automatically contributing a certain amount each month) who know very little about investing. I'm sure I could learn how to do a limit order but I'm not sure that they would feel comfortable doing this.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by southerndoc » Sat Jun 29, 2019 9:58 am

alex_686 wrote:
Sat Jun 29, 2019 7:28 am
southerndoc wrote:
Sat Jun 29, 2019 2:26 am
2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.
Having actually struck a fund’s NAV I can tell you that you have it flipped. A ETF’s market price is almost always mote reflective of the market than the accountant’s estimation of the market price.

Regardless, ETFs are the future. I can talk all day on why manual transmission are best, but they are getting harder to find. Such is the tide of history.
I have some ETF's, but they are iShares held in a traditional investment account.

Happy to see that I had it wrong that market prices influence the ETF price. That was one of the concerns I had about converting mutual funds to ETF's.

Why are ETF's more tax efficient?

I have an Individual 401(k) with Vanguard. Given they just now changed from Investor to Admiral shares, I would presume that ETF investing will take 5 years in an i401(k) account.

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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by southerndoc » Sat Jun 29, 2019 10:01 am

Broken Man 1999 wrote:
Sat Jun 29, 2019 9:15 am
southerndoc wrote:
Sat Jun 29, 2019 2:26 am
I see two problems with ETF's in retirement accounts when mutual funds are available:

1. Reinvesting your dividends becomes more tricky. Correct me if I'm wrong, but you can't purchase partial shares of ETF's like you can mutual funds. So you won't be able to as readily reinvest your dividends.

2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.

1. You are incorrect. ETF dividends can be used to buy whatever amount they will cover of an ETF share. This includes partial ETF shares.
The transaction below shows details of my Total Bond Market ETF dividend on 05/06/2019 of $205.64 purchasing full shares (2) and partial share (.5430) @ $80.57 / share.

05/06/2019 2.5430 $80.87 $205.64

2. Mutual funds are also subject to market prices of their holdings. However, they are only totaled up once a day after trading closes. ETFs are totaled up (priced) by the market as they are traded. One can set the price for up to 60 days they are willing to pay or the price they are willing to sell, or one can let the market price it for you. You control that pricing. With a mutual fund you will get the NAV after close for buying or selling.

I prefer ETFs, you prefer mutual funds. At the end of the day, do what you want. But, see, I don't have to wait until the end of the day, I can do what I want during the day! :D

Broken Man 1999
I think you are confused. I never said which one I prefer. I'm limited to mutual fund investing in my Individual 401(k) because Vanguard doesn't allow ETF's. So it's not an option. I own ETF's in my traditional investing account.

Broken Man 1999
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Re: Vanguard Advertising Mutual Fund to ETF Conversion

Post by Broken Man 1999 » Sat Jun 29, 2019 10:22 am

southerndoc wrote:
Sat Jun 29, 2019 10:01 am
Broken Man 1999 wrote:
Sat Jun 29, 2019 9:15 am
southerndoc wrote:
Sat Jun 29, 2019 2:26 am
I see two problems with ETF's in retirement accounts when mutual funds are available:

1. Reinvesting your dividends becomes more tricky. Correct me if I'm wrong, but you can't purchase partial shares of ETF's like you can mutual funds. So you won't be able to as readily reinvest your dividends.

2. ETF's are subject to market prices. The ETF may differ significantly from its NAV if I'm not mistaken.

1. You are incorrect. ETF dividends can be used to buy whatever amount they will cover of an ETF share. This includes partial ETF shares.
The transaction below shows details of my Total Bond Market ETF dividend on 05/06/2019 of $205.64 purchasing full shares (2) and partial share (.5430) @ $80.57 / share.

05/06/2019 2.5430 $80.87 $205.64

2. Mutual funds are also subject to market prices of their holdings. However, they are only totaled up once a day after trading closes. ETFs are totaled up (priced) by the market as they are traded. One can set the price for up to 60 days they are willing to pay or the price they are willing to sell, or one can let the market price it for you. You control that pricing. With a mutual fund you will get the NAV after close for buying or selling.

I prefer ETFs, you prefer mutual funds. At the end of the day, do what you want. But, see, I don't have to wait until the end of the day, I can do what I want during the day! :D

Broken Man 1999
I think you are confused. I never said which one I prefer. I'm limited to mutual fund investing in my Individual 401(k) because Vanguard doesn't allow ETF's. So it's not an option. I own ETF's in my traditional investing account.
My apologies! It seemed to me you weren't familiar with a couple of ETF characteristics, and were probably in mutual funds.

Do you receive dividends from your ETFs in your traditional account?

At Vanguard I have four options for Total Bond Market ETF dividends:
1. Reinvest.
2. Send to settlement account.
3. Send to bank account.
4. Have a check mailed.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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