Full list of Vanguard ETFs that are cheaper than their index funds?

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JustinR
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Full list of Vanguard ETFs that are cheaper than their index funds?

Post by JustinR » Mon Jul 15, 2019 3:55 pm

Here's the full list sorted by basis points saved.

For every $10,000 invested, you save that number in dollars per year:
  • FTSE All-World ex-US Small-Cap (4) - VSS 0.12% / VFSAX 0.16%
  • Total International Stock (2) - VXUS 0.09% / VTIAX 0.11%
  • FTSE All-World ex-US (2) - VEU 0.09% / VFWAX 0.11%
  • Emerging Markets (2) - VWO 0.12% / VEMAX 0.14%
  • Dividend Appreciation (2) - VIG 0.06% / VDADX 0.08%
  • High Dividend Yield (2) - VYM 0.06% / VHYAX 0.08%
  • Total International Bond (2) - BNDX 0.09% / VTABX 0.11%
  • Developed Markets (2) - VEA 0.05% / VTMGX 0.07%
  • Total Bond Market (1.5) - BND 0.035% / VBTLX 0.05%
  • Total Stock Market (1) - VTI 0.03% / VTSAX 0.04%
  • S&P 500 (1) - VOO 0.03% / VFIAX 0.04%
  • Total World Stock (1) - VT 0.09% / VTWAX 0.10%
  • European / Europe (1) - VGK 0.09% / VEUSX 0.10%
  • Pacific (1) - VPL 0.09% / VPADX 0.10%
  • Growth (1) - VUG 0.04% / VIGAX 0.05%
  • Large-Cap (1) - VV 0.04% / VLCAX 0.05%
  • Value (1) - VTV 0.04% / VVIAX 0.05%
  • Mid-Cap (1) - VO 0.04% / VIMAX 0.05%
  • Tax-Exempt Bond (1) - VTEB 0.08% / VTEAX 0.09%


Nicer table:
Angst wrote:
Tue Jul 16, 2019 8:21 am

Code: Select all

FTSE World exUS SmCap(25% 4) - VSS  0.12% / VFSAX 0.16%
Developed Markets    (29% 2) - VEA  0.05% / VTMGX 0.07%
Dividend Appreciation(25% 2) - VIG  0.06% / VDADX 0.08%
High Dividend Yield  (25% 2) - VYM  0.06% / VHYAX 0.08%
Total Int'l Bond     (18% 2) - BNDX 0.09% / VTABX 0.11%
FTSE All-World ex-US (18% 2) - VEU  0.09% / VFWAX 0.11%
Total Int'l Stock    (18% 2) - VXUS 0.09% / VTIAX 0.11%
Emerging Markets     (14% 2) - VWO  0.12% / VEMAX 0.14%
Total Bond Market    (30% 1.5) BND  0.035%/ VBTLX 0.05%
Total Stock Market   (25% 1) - VTI  0.03% / VTSAX 0.04%
S&P 500              (25% 1) - VOO  0.03% / VFIAX 0.04%
Growth               (20% 1) - VUG  0.04% / VIGAX 0.05%
Large-Cap            (20% 1) - VV   0.04% / VLCAX 0.05%
Value                (20% 1) - VTV  0.04% / VVIAX 0.05%
Mid-Cap              (20% 1) - VO   0.04% / VIMAX 0.05%
Tax-Exempt Bond      (11% 1) - VTEB 0.08% / VTEAX 0.09%
Total World Stock    (10% 1) - VT   0.09% / VTWAX 0.10%
European / Europe    (10% 1) - VGK  0.09% / VEUSX 0.10%
Pacific              (10% 1) - VPL  0.09% / VPADX 0.10%
Last edited by JustinR on Tue Jul 16, 2019 6:04 pm, edited 7 times in total.

Silk McCue
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Silk McCue » Mon Jul 15, 2019 5:12 pm

No, but you can toggle between Mutual Fund and ETFs on this link or open each under separate browser tabs and compare pretty quickly.

https://investor.vanguard.com/etf/list# ... nd-returns

If you do so please share the results.

Cheers

Broken Man 1999
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Broken Man 1999 » Mon Jul 15, 2019 6:29 pm

Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

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

venkman
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by venkman » Mon Jul 15, 2019 10:21 pm

Here's a full list of all the Vanguard index funds with a lower-cost ETF version, where the savings on the ETF will likely make a significant difference in your long-term return:









:happy

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by xenial » Mon Jul 15, 2019 10:39 pm

JustinR, I think this pdf document provides the information you want: Find out which Vanguard index mutual funds can be converted tax-free to Vanguard ETFs. It lists the 18 traditional funds for which the associated ETFs are cheaper, as well as the 29 with equal expense ratios.

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JustinR
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by JustinR » Tue Jul 16, 2019 5:28 am

xenial wrote:
Mon Jul 15, 2019 10:39 pm
JustinR, I think this pdf document provides the information you want: Find out which Vanguard index mutual funds can be converted tax-free to Vanguard ETFs. It lists the 18 traditional funds for which the associated ETFs are cheaper, as well as the 29 with equal expense ratios.
Thank you!

The only fund that's not on that page is Total Bond Market.

Here's the full list sorted by savings:
  • Total Bond Market (30%) - BND 0.035% / VBTLX 0.05%
  • Developed Markets (29%) - VEA 0.05% / VTMGX 0.07%
  • Dividend Appreciation (25%) - VIG 0.06% / VDADX 0.08%
  • High Dividend Yield (25%) - VYM 0.06% / VHYAX 0.08%
  • Total Stock Market (25%) - VTI 0.03% / VTSAX 0.04%
  • FTSE All-World ex-US Small-Cap (25%) - VSS 0.12% / VFSAX 0.16%
  • S&P 500 (25%) - VOO 0.03% / VFIAX 0.04%
  • Growth (20%) - VUG 0.04% / VIGAX 0.05%
  • Large-Cap (20%) - VV 0.04% / VLCAX 0.05%
  • Value (20%) - VTV 0.04% / VVIAX 0.05%
  • Mid-Cap (20%) - VO 0.04% / VIMAX 0.05%
  • Total International Bond (18%) - BNDX 0.09% / VTABX 0.11%
  • FTSE All-World ex-US (18%) - VEU 0.09% / VFWAX 0.11%
  • Total International Stock (18%) - VXUS 0.09% / VTIAX 0.11%
  • Emerging Markets (14%) - VWO 0.12% / VEMAX 0.14%
  • Tax-Exempt Bond (11%) - VTEB 0.08% / VTEAX 0.09%
  • Total World Stock (10%) - VT 0.09% / VTWAX 0.10%
  • European / Europe (10%) - VGK 0.09% / VEUSX 0.10%
  • Pacific (10%) - VPL 0.09% / VPADX 0.10%

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iceport
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by iceport » Tue Jul 16, 2019 7:07 am

venkman wrote:
Mon Jul 15, 2019 10:21 pm
Here's a full list of all the Vanguard index funds with a lower-cost ETF version, where the savings on the ETF will likely make a significant difference in your long-term return:









:happy
Agreed! :beer

When I consider the additional time and hassle re-balancing an entire portfolio of pesky ETFs would require, compared to the wonderful simplicity of re-balancing with mutual funds, it would make absolutely no sense to reach for a lower basis point here or there.

8-)
"Discipline matters more than allocation.” ─William Bernstein

Angst
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Angst » Tue Jul 16, 2019 8:21 am

My apologies, but I really like fixed-width fonts... and I couldn't stop myself from adding actual basis point (BP) differences:

Code: Select all

FTSE World exUS SmCap(25% 4) - VSS  0.12% / VFSAX 0.16%
Developed Markets    (29% 2) - VEA  0.05% / VTMGX 0.07%
Dividend Appreciation(25% 2) - VIG  0.06% / VDADX 0.08%
High Dividend Yield  (25% 2) - VYM  0.06% / VHYAX 0.08%
Total Int'l Bond     (18% 2) - BNDX 0.09% / VTABX 0.11%
FTSE All-World ex-US (18% 2) - VEU  0.09% / VFWAX 0.11%
Total Int'l Stock    (18% 2) - VXUS 0.09% / VTIAX 0.11%
Emerging Markets     (14% 2) - VWO  0.12% / VEMAX 0.14%
Total Bond Market    (30% 1.5) BND  0.035%/ VBTLX 0.05%
Total Stock Market   (25% 1) - VTI  0.03% / VTSAX 0.04%
S&P 500              (25% 1) - VOO  0.03% / VFIAX 0.04%
Growth               (20% 1) - VUG  0.04% / VIGAX 0.05%
Large-Cap            (20% 1) - VV   0.04% / VLCAX 0.05%
Value                (20% 1) - VTV  0.04% / VVIAX 0.05%
Mid-Cap              (20% 1) - VO   0.04% / VIMAX 0.05%
Tax-Exempt Bond      (11% 1) - VTEB 0.08% / VTEAX 0.09%
Total World Stock    (10% 1) - VT   0.09% / VTWAX 0.10%
European / Europe    (10% 1) - VGK  0.09% / VEUSX 0.10%
Pacific              (10% 1) - VPL  0.09% / VPADX 0.10%
I kinda agree with iceport overall. I'd have to prefer having an ETF over a Mutual Fund in the first place (which I don't) or at least be essentially indifferent (which I'm not) before I'd switch for 1 to 2 BPs. As such, I've left my TSM and EM Vanguard Mutual Funds as they are. (Maybe I should think about that EM fund for 2 BP... nah, not right now.) I've held VSS longer than I can remember so no issue there.

Regarding perspective: 1 BP on a $10,000 investment is $1 / year. I have upwards of $50k in VEMAX. Do I want to save 2 BP/yr (or $10) by switching to the ETF? It's a tax-free transfer, but I can't go back the other way tax free. And I'd lose the easy, end-of-day NAV pricing of a mutual fund and the ability to automate some transactions. But on the other hand, e.g. with VSS, I have about $100k and 4 BP is $40/yr and I'm thinking that's something I'm glad to be getting. You have to do the math in conjunction with thinking about the ETF vs. MF pros & cons

[Edited - to sort by BP differences]
Last edited by Angst on Tue Jul 16, 2019 5:57 pm, edited 1 time in total.

xenial
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by xenial » Tue Jul 16, 2019 9:48 am

JustinR wrote:
Tue Jul 16, 2019 5:28 am
xenial wrote:
Mon Jul 15, 2019 10:39 pm
JustinR, I think this pdf document provides the information you want: Find out which Vanguard index mutual funds can be converted tax-free to Vanguard ETFs. It lists the 18 traditional funds for which the associated ETFs are cheaper, as well as the 29 with equal expense ratios.
Thank you!

The only fund that's not on that page is Total Bond Market.

Here's the full list sorted by savings:
  • Total Bond Market (30%) - BND 0.035% / VBTLX 0.05%
  • Developed Markets (29%) - VEA 0.05% / VTMGX 0.07%
  • Dividend Appreciation (25%) - VIG 0.06% / VDADX 0.08%
  • High Dividend Yield (25%) - VYM 0.06% / VHYAX 0.08%
  • Total Stock Market (25%) - VTI 0.03% / VTSAX 0.04%
  • FTSE All-World ex-US Small-Cap (25%) - VSS 0.12% / VFSAX 0.16%
  • S&P 500 (25%) - VOO 0.03% / VFIAX 0.04%
  • Growth (20%) - VUG 0.04% / VIGAX 0.05%
  • Large-Cap (20%) - VV 0.04% / VLCAX 0.05%
  • Value (20%) - VTV 0.04% / VVIAX 0.05%
  • Mid-Cap (20%) - VO 0.04% / VIMAX 0.05%
  • Total International Bond (18%) - BNDX 0.09% / VTABX 0.11%
  • FTSE All-World ex-US (18%) - VEU 0.09% / VFWAX 0.11%
  • Total International Stock (18%) - VXUS 0.09% / VTIAX 0.11%
  • Emerging Markets (14%) - VWO 0.12% / VEMAX 0.14%
  • Tax-Exempt Bond (11%) - VTEB 0.08% / VTEAX 0.09%
  • Total World Stock (10%) - VT 0.09% / VTWAX 0.10%
  • European / Europe (10%) - VGK 0.09% / VEUSX 0.10%
  • Pacific (10%) - VPL 0.09% / VPADX 0.10%
I believe Total Bond Market Index was omitted from Vanguard's list for good reason --- it isn't eligible for tax-free conversion.

Common ETF questions
Vanguard wrote: Can I convert my conventional Vanguard mutual fund shares to Vanguard ETF Shares?

Yes. Most funds that offer ETF Shares will allow you to convert from conventional shares of the same fund to ETF Shares. (Four of our bond ETFs—Total Bond Market, Short-Term Bond, Intermediate-Term Bond, and Long-Term Bond—don't allow for conversions.)

Conversions are allowed from both Investor and Admiral™ Shares and are tax-free if you own your mutual fund and ETF Shares through Vanguard.

Keep in mind that you can't convert ETF Shares back to conventional shares. If you decide in the future to sell your Vanguard ETF Shares and repurchase conventional shares, that transaction could be taxable.

If you have a brokerage account at Vanguard, there's no charge to convert conventional shares to ETF Shares. If you have questions, call us at 866-499-8473.

If you own your Vanguard mutual fund shares through another broker, keep in mind that some brokers may not be able to convert fractional shares, which could result in a modest taxable gain for you. Other brokers may also charge a fee for a conversion. Contact your broker for more information.
I remember reading somewhere that the inability to convert those bond funds has to do with the conventional and ETF shares accruing dividends differently.

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Ever Ready
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Ever Ready » Tue Jul 16, 2019 10:39 am

Can one do an online conversion without calling a representative? I haven't been able to determine how to accomplish this.

Angst
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Angst » Tue Jul 16, 2019 10:53 am

Ever Ready wrote:
Tue Jul 16, 2019 10:39 am
Can one do an online conversion without calling a representative? I haven't been able to determine how to accomplish this.
It's been a long time since I did it - I think I just called them. I wouldn't hesitate to send them a msg through the messaging system online w/ Vanguard asking them to do it, explicitly including your acct/fund # info. Let us know if it works - I would think so.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by pokebowl » Tue Jul 16, 2019 10:55 am

Ever Ready wrote:
Tue Jul 16, 2019 10:39 am
Can one do an online conversion without calling a representative? I haven't been able to determine how to accomplish this.
No currently you need to call. They will ask you how much you want to convert or if you want to convert the entire fund, 24 hours later the funds change and you receive a confirmation email. It is relatively painless (minus having to speak with a human), however as there is a human element doing the conversion always double check your cost basis after each attempt. :beer
Nullius in verba.

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Ever Ready
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Ever Ready » Tue Jul 16, 2019 11:35 am

Thanks for the replies. I have seen recent posts about pop-up windows with a link to do online conversion, but I have never seen one, and could find no mention of one on Vanguard's site.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by jhfenton » Tue Jul 16, 2019 12:01 pm

Ever Ready wrote:
Tue Jul 16, 2019 11:35 am
Thanks for the replies. I have seen recent posts about pop-up windows with a link to do online conversion, but I have never seen one, and could find no mention of one on Vanguard's site.
It appears that they're testing online conversions with a limited set of funds and perhaps with a limited set of customers. I expect they'll eventually roll the online conversion option out to everyone for all of the eligible funds, but only Vanguard knows when that might be.

At the moment, in most cases, conversion requires a phone call.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 12:26 pm

Broken Man 1999 wrote:
Mon Jul 15, 2019 6:29 pm
Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

Broken Man 1999
I'd read the annual report for the fund you own. The actual costs are broken down and allocated to each fund class - 1) Management and Administrative, 2) Marketing and Distribution, and 3) Shareholders' Reports. You'll learn a lot about the inner workings of your fund.

Also, remember a lower cost for Vanguard is not the same as a lower cost for you :oops:

Broken Man 1999
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Broken Man 1999 » Tue Jul 16, 2019 12:43 pm

schooner wrote:
Tue Jul 16, 2019 12:26 pm
Broken Man 1999 wrote:
Mon Jul 15, 2019 6:29 pm
Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

Broken Man 1999
I'd read the annual report for the fund you own. The actual costs are broken down and allocated to each fund class - 1) Management and Administrative, 2) Marketing and Distribution, and 3) Shareholders' Reports. You'll learn a lot about the inner workings of your fund.

Also, remember a lower cost for Vanguard is not the same as a lower cost for you :oops:
Your post is rather silly...

Not sure why you are trying to school me about ETFs. I do understand the angst of others who have harmed themselves using ETFs. It must be painful, though, since I do not trade ETFs I have suffered no pain at all. However, I have suffered lower ERs, oh, wait, that's good isn't it!

If one lacks discipline to handle ETFs, one shouldn't handle ETFs. Others find ETFs a useful tool. Free to choose! What a country.

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

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House Blend
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by House Blend » Tue Jul 16, 2019 1:04 pm

Angst wrote:
Tue Jul 16, 2019 8:21 am
I couldn't stop myself from adding actual basis point (BP) differences:
+1.

What matters, from the investor perspective, is the difference [*] in expense ratios, not the ratio of expense ratios. (Unless your job description involves marketing and sales.)

For example, a reduction in ER from 0.25% from 0.20% is a far more significant event than a reduction from 0.02% to 0.01%. Don't fall victim to marketing spin that highlights the first as a cost reduction of 20% and the second as a reduction of 50%.

On a 10 year investment, the reduction in cost in the first case will increase the value of your investment by about 0.5%, but only about 0.1% in the second.

[*] More precisely, the relative impact is a function of the ratio of 1 - ER#1 to 1 - ER#2. As long as the ERs involved are small, using differences is accurate enough.

schooner
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 1:50 pm

Broken Man 1999 wrote:
Tue Jul 16, 2019 12:43 pm
schooner wrote:
Tue Jul 16, 2019 12:26 pm
Broken Man 1999 wrote:
Mon Jul 15, 2019 6:29 pm
Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

Broken Man 1999
I'd read the annual report for the fund you own. The actual costs are broken down and allocated to each fund class - 1) Management and Administrative, 2) Marketing and Distribution, and 3) Shareholders' Reports. You'll learn a lot about the inner workings of your fund.

Also, remember a lower cost for Vanguard is not the same as a lower cost for you :oops:
Your post is rather silly...

Not sure why you are trying to school me about ETFs. I do understand the angst of others who have harmed themselves using ETFs. It must be painful, though, since I do not trade ETFs I have suffered no pain at all. However, I have suffered lower ERs, oh, wait, that's good isn't it!

If one lacks discipline to handle ETFs, one shouldn't handle ETFs. Others find ETFs a useful tool. Free to choose! What a country.

Broken Man 1999
The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.

Source: https://institutional.vanguard.com/VGAp ... daskspread

And this applies to most buy and hold investors. I don't know about you, but I dollar cost average (as I save and invest) and reinvest my dividends. Each of these transactions is subject to the spread.

Again, what costs less for Vanguard (in terms of management and administration) doesn't necessarily cost less for the average investor.

Broken Man 1999
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Broken Man 1999 » Tue Jul 16, 2019 2:18 pm

schooner wrote:
Tue Jul 16, 2019 1:50 pm
Broken Man 1999 wrote:
Tue Jul 16, 2019 12:43 pm
schooner wrote:
Tue Jul 16, 2019 12:26 pm
Broken Man 1999 wrote:
Mon Jul 15, 2019 6:29 pm
Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

Broken Man 1999
I'd read the annual report for the fund you own. The actual costs are broken down and allocated to each fund class - 1) Management and Administrative, 2) Marketing and Distribution, and 3) Shareholders' Reports. You'll learn a lot about the inner workings of your fund.

Also, remember a lower cost for Vanguard is not the same as a lower cost for you :oops:
Your post is rather silly...

Not sure why you are trying to school me about ETFs. I do understand the angst of others who have harmed themselves using ETFs. It must be painful, though, since I do not trade ETFs I have suffered no pain at all. However, I have suffered lower ERs, oh, wait, that's good isn't it!

If one lacks discipline to handle ETFs, one shouldn't handle ETFs. Others find ETFs a useful tool. Free to choose! What a country.

Broken Man 1999
The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.

Source: https://institutional.vanguard.com/VGAp ... daskspread

And this applies to most buy and hold investors. I don't know about you, but I dollar cost average (as I save and invest) and reinvest my dividends. Each of these transactions is subject to the spread.

Again, what costs less for Vanguard (in terms of management and administration) doesn't necessarily cost less for the average investor.


Did you have a bad experience using ETFs?
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

schooner
Posts: 299
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 2:28 pm

Broken Man 1999 wrote:
Tue Jul 16, 2019 2:18 pm
schooner wrote:
Tue Jul 16, 2019 1:50 pm
Broken Man 1999 wrote:
Tue Jul 16, 2019 12:43 pm
schooner wrote:
Tue Jul 16, 2019 12:26 pm
Broken Man 1999 wrote:
Mon Jul 15, 2019 6:29 pm
Do a search on "Vanguard lowers 21 ETFs ERs", there is a whole thread, mostly wailing and gnashing of teeth from mutual fund owners whose Admiral class equivalent mutual funds are now seeing ERs for ETFs lower than their Admiral class.

Oh, the horror........

Me, I like it, I like it a lot!

Broken Man 1999
I'd read the annual report for the fund you own. The actual costs are broken down and allocated to each fund class - 1) Management and Administrative, 2) Marketing and Distribution, and 3) Shareholders' Reports. You'll learn a lot about the inner workings of your fund.

Also, remember a lower cost for Vanguard is not the same as a lower cost for you :oops:
Your post is rather silly...

Not sure why you are trying to school me about ETFs. I do understand the angst of others who have harmed themselves using ETFs. It must be painful, though, since I do not trade ETFs I have suffered no pain at all. However, I have suffered lower ERs, oh, wait, that's good isn't it!

If one lacks discipline to handle ETFs, one shouldn't handle ETFs. Others find ETFs a useful tool. Free to choose! What a country.

Broken Man 1999
The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.

Source: https://institutional.vanguard.com/VGAp ... daskspread

And this applies to most buy and hold investors. I don't know about you, but I dollar cost average (as I save and invest) and reinvest my dividends. Each of these transactions is subject to the spread.

Again, what costs less for Vanguard (in terms of management and administration) doesn't necessarily cost less for the average investor.


Did you have a bad experience using ETFs?
I get it, you like ETFs! But I'm just pointing out the costs of ETF ownership are complicated and often higher than you might expect. And I cited an actual source, straight from Vanguard. Sure, your costs will be lower if you are a buy and hold investor. But are you saying the bid/ask spread doesn't exist or doesn't apply every time you add new money or reinvest dividends.

Heck, even ETF.com ran a story about it. And I'm guessing from the domain name, they really like ETFs too!

https://www.etf.com/sections/features-a ... /etf-costs

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Broken Man 1999 » Tue Jul 16, 2019 2:33 pm

Did you have a bad experience using ETFs?
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Northern Flicker » Tue Jul 16, 2019 2:38 pm

schooner wrote: The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.
...
And this applies to most buy and hold investors. I don't know about you, but I dollar cost average (as I save and invest) and reinvest my dividends. Each of these transactions is subject to the spread.
If avoiding the bid-ask spread (and control of time of transaction) are more important to you than having control over the trade price, you can dollar cost average into the ETFs in question without having to pay about half of the bid-ask spread as an extra transaction cost as long as your broker is Vanguard. Just make the deposits to the mutual fund share class and then have Vanguard convert the shares to ETF shares.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 2:48 pm

Northern Flicker wrote:
Tue Jul 16, 2019 2:38 pm
schooner wrote: The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.
...
And this applies to most buy and hold investors. I don't know about you, but I dollar cost average (as I save and invest) and reinvest my dividends. Each of these transactions is subject to the spread.
If avoiding the bid-ask spread (and control of time of transaction) are more important to you than having control over the trade price, you can dollar cost average into the ETFs in question without having to pay about half of the bid-ask spread as an extra transaction cost as long as your broker is Vanguard. Just make the deposits to the mutual fund share class and then have Vanguard convert the shares to ETF shares.
How can I have "control over the trade price"? Are you telling me you can time intra-day swings when I purchase an ETFs?

Say I put in a buy limit order for VTI. What happens if the price doesn't get to that level on the day I place the order? Do you wait until the next day to see if the price goes back down. Do you just buy at a higher price the next day? How in the world is that not market timing? How in the world is that better than just purchasing at market close NAV? What am I missing?

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by vineviz » Tue Jul 16, 2019 2:49 pm

schooner wrote:
Tue Jul 16, 2019 1:50 pm
The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.
If you're a buy-and-hold investor, it doesn't take long for the expense ratio advantage to overwhelm the bid/ask spread.

And either way you're talking about inconsequentially small numbers.
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 2:59 pm

vineviz wrote:
Tue Jul 16, 2019 2:49 pm
schooner wrote:
Tue Jul 16, 2019 1:50 pm
The 30-day average bid/ask spread is much greater than many of these differences. The Expense ratio advantage for mid-cap (VO) is 0.01% but the average bid/ask spread is 0.03% of the market price.
If you're a buy-and-hold investor, it doesn't take long for the expense ratio advantage to overwhelm the bid/ask spread.

And either way you're talking about inconsequentially small numbers.
Can't argue with that. For the mid-cap (VO) example, the holding period would need to be 3 years.

But you're not factoring in dollar cost averaging (adding new money as you save) and dividend reinvestment. I think this fact patter is more like a "buy and hold investor" when in reality, they may technically be trading 20-30 times a year.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Northern Flicker » Tue Jul 16, 2019 3:12 pm

How can I have "control over the trade price"? Are you telling me you can time intra-day swings when I purchase an ETFs?

Say I put in a buy limit order for VTI. What happens if the price doesn't get to that level on the day I place the order?
Well that’s why I pointed out that there is a tradeoff of control of trade price and trade timing (see the part I put in parentheses in my previous post). With a mutual fund you can guarantee the timing of the trade at market close but not the price. With an ETF you can control the price with a limit order but have no control of the timing of the trade.

Again, with Vanguard Brokerage Services you can have whichever behavior you prefer with each acquisition of ETF shares because of the share conversion feature.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by willthrill81 » Tue Jul 16, 2019 3:32 pm

You know you're a Boglehead when you start switching funds to save 1 or 2 basis points. :shock:
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Northern Flicker » Tue Jul 16, 2019 4:12 pm

willthrill81 wrote:
Tue Jul 16, 2019 3:32 pm
You know you're a Boglehead when you start switching funds to save 1 or 2 basis points.
There are other benefits to holding ETFs, such as being shielded from the effects of exchanges in and out of the fund by other investors.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by vineviz » Tue Jul 16, 2019 4:17 pm

schooner wrote:
Tue Jul 16, 2019 2:59 pm
But you're not factoring in dollar cost averaging (adding new money as you save) and dividend reinvestment. I think this fact patter is more like a "buy and hold investor" when in reality, they may technically be trading 20-30 times a year.
It doesn't matter how often you make a purchase: the only thing that matters in this calculation is how long you hold each share AFTER you purchase it. As long as it's more than 3 years, you're ahead of the game with this ETF. Probably sooner, since the spread is usually less than 0.03%
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Tue Jul 16, 2019 4:22 pm

Northern Flicker wrote:
Tue Jul 16, 2019 3:12 pm
How can I have "control over the trade price"? Are you telling me you can time intra-day swings when I purchase an ETFs?

Say I put in a buy limit order for VTI. What happens if the price doesn't get to that level on the day I place the order?
Well that’s why I pointed out that there is a tradeoff of control of trade price and trade timing (see the part I put in parentheses in my previous post). With a mutual fund you can guarantee the timing of the trade at market close but not the price. With an ETF you can control the price with a limit order but have no control of the timing of the trade.

Again, with Vanguard Brokerage Services you can have whichever behavior you prefer with each acquisition of ETF shares because of the share conversion feature.
Maybe it's semantics, but I don't see how you can control the price with a limit order. The price is what it is. The limit order is no different than "I really wish the price was X." I don't see how it's any different than waiting until 3:59 to put through a mutual fund order...you'll have the same amount of 'control' over the price.

Take a concrete example of today. VTI opened at $153.48 and closed at $153.12. And if you put in a limit buy order at $153.01, you lucked out because it dipped below that price. Awesome! But you putting in the buy limit order did not control the price. It could have never gone below $153.01. And it could stay above $153.01 for the next week, the next month, the next year, or forever. No one knows. Your limit buy order gave you absolutely no control over the price!!

Plus all of this "control over the price" stuff is meaningless since the expected return from market open to market close is essentially zero. So unless you're good at predicting short term price moves. It doesn't matter when you purchase the ETF during the day.

Source: https://www.nytimes.com/2018/02/02/your ... ading.html

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Northern Flicker » Tue Jul 16, 2019 4:57 pm

i think you aware that there are differences in behavior that can be disambiguated with precise use of language, and that the pros and cons of each choice do not just melt away as semantics.

With a limit order you control the price of a trade. You don’t guarantee when a trade happens or if it happens at all. The opposite is true with a mutual fund— you may request the exchange in or out at a time near to market close to try to minimize exchange price variability but ultimately you do not control the actual price received. You do get reasonable assurance that the exchange will happen at the next market close. In the case of non-US Vanguard mutual funds, so-called fair value pricing is an additional source of price uncertainty with a mutual fund. The latter is not avoided by buying mutual fund shares and converting, but is a feature of Vanguard non-US stock index fund shares.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by columbia » Tue Jul 16, 2019 5:17 pm

venkman wrote:
Mon Jul 15, 2019 10:21 pm
Here's a full list of all the Vanguard index funds with a lower-cost ETF version, where the savings on the ETF will likely make a significant difference in your long-term return:









:happy
Well done and quite correct.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by edge » Tue Jul 16, 2019 5:37 pm

How does VG do in terms of handling tax lots for MF conversions to ETF?

I have large taxable holdings in admiral funds. If I lose tax lot accounting or it gets messy, the conversion will not be worth it.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by JustinR » Tue Jul 16, 2019 5:43 pm

Angst wrote:
Tue Jul 16, 2019 8:21 am
My apologies, but I really like fixed-width fonts... and I couldn't stop myself from adding actual basis point (BP) differences:

Code: Select all

Total Bond Market    (30% 1.5) BND  0.035%/ VBTLX 0.05%
Developed Markets    (29% 2) - VEA  0.05% / VTMGX 0.07%
Dividend Appreciation(25% 2) - VIG  0.06% / VDADX 0.08%
High Dividend Yield  (25% 2) - VYM  0.06% / VHYAX 0.08%
Total Stock Market   (25% 1) - VTI  0.03% / VTSAX 0.04%
FTSE World exUS SmCap(25% 4) - VSS  0.12% / VFSAX 0.16%
S&P 500              (25% 1) - VOO  0.03% / VFIAX 0.04%
Growth               (20% 1) - VUG  0.04% / VIGAX 0.05%
Large-Cap            (20% 1) - VV   0.04% / VLCAX 0.05%
Value                (20% 1) - VTV  0.04% / VVIAX 0.05%
Mid-Cap              (20% 1) - VO   0.04% / VIMAX 0.05%
Total Int'l Bond     (18% 2) - BNDX 0.09% / VTABX 0.11%
FTSE All-World ex-US (18% 2) - VEU  0.09% / VFWAX 0.11%
Total Int'l Stock    (18% 2) - VXUS 0.09% / VTIAX 0.11%
Emerging Markets     (14% 2) - VWO  0.12% / VEMAX 0.14%
Tax-Exempt Bond      (11% 1) - VTEB 0.08% / VTEAX 0.09%
Total World Stock    (10% 1) - VT   0.09% / VTWAX 0.10%
European / Europe    (10% 1) - VGK  0.09% / VEUSX 0.10%
Pacific              (10% 1) - VPL  0.09% / VPADX 0.10%
I kinda agree with iceport overall. I'd have to prefer having an ETF over a Mutual Fund in the first place (which I don't) or at least be essentially indifferent (which I'm not) before I'd switch for 1 to 2 BPs. As such, I've left my TSM and EM Vanguard Mutual Funds as they are. (Maybe I should think about that EM fund for 2 BP... nah, not right now.) I've held VSS longer than I can remember so no issue there.

Regarding perspective: 1 BP on a $10,000 investment is $1 / year. I have upwards of $50k in VEMAX. Do I want to save 2 BP/yr (or $10) by switching to the ETF? It's a tax-free transfer, but I can't go back the other way tax free. And I'd lose the easy, end-of-day NAV pricing of a mutual fund and the ability to automate some transactions. But on the other hand, e.g. with VSS, I have about $100k and 4 BP is $40/yr and I'm thinking that's something I'm glad to be getting. You have to do the math in conjunction with thinking about the ETF vs. MF pros & cons
House Blend wrote:
Tue Jul 16, 2019 1:04 pm
Angst wrote:
Tue Jul 16, 2019 8:21 am
I couldn't stop myself from adding actual basis point (BP) differences:
+1.

What matters, from the investor perspective, is the difference [*] in expense ratios, not the ratio of expense ratios. (Unless your job description involves marketing and sales.)

For example, a reduction in ER from 0.25% from 0.20% is a far more significant event than a reduction from 0.02% to 0.01%. Don't fall victim to marketing spin that highlights the first as a cost reduction of 20% and the second as a reduction of 50%.

On a 10 year investment, the reduction in cost in the first case will increase the value of your investment by about 0.5%, but only about 0.1% in the second.

[*] More precisely, the relative impact is a function of the ratio of 1 - ER#1 to 1 - ER#2. As long as the ERs involved are small, using differences is accurate enough.
Thank you. You're right, bp is way more important and I've resorted the list in the OP to reflect that.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by JustinR » Tue Jul 16, 2019 6:01 pm

edge wrote:
Tue Jul 16, 2019 5:37 pm
How does VG do in terms of handling tax lots for MF conversions to ETF?

I have large taxable holdings in admiral funds. If I lose tax lot accounting or it gets messy, the conversion will not be worth it.
Each MF lot is converted individually. So you'll have the same number of lots (the ETF lots will be fractional i.e. 2.76).

Uncovered shares (MF shares before 2012) will be combined into one lot I believe.

Formula for each lot conversion is:
MFshares * mfPrice / etfPrice

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Angst » Tue Jul 16, 2019 6:02 pm

JustinR wrote:
Tue Jul 16, 2019 5:43 pm
Thank you. You're right, bp is way more important and I've resorted the list in the OP to reflect that.
Good idea, I just did the same to mine. :beer

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by edge » Tue Jul 16, 2019 6:18 pm

Can partial etf lots be sold easily?
JustinR wrote:
Tue Jul 16, 2019 6:01 pm
edge wrote:
Tue Jul 16, 2019 5:37 pm
How does VG do in terms of handling tax lots for MF conversions to ETF?

I have large taxable holdings in admiral funds. If I lose tax lot accounting or it gets messy, the conversion will not be worth it.
Each MF lot is converted individually. So you'll have the same number of lots (the ETF lots will be fractional i.e. 2.76).

Uncovered shares (MF shares before 2012) will be combined into one lot I believe.

Formula for each lot conversion is:
MFshares * mfPrice / etfPrice

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by JustinR » Tue Jul 16, 2019 6:33 pm

edge wrote:
Tue Jul 16, 2019 6:18 pm
Can partial etf lots be sold easily?
JustinR wrote:
Tue Jul 16, 2019 6:01 pm
edge wrote:
Tue Jul 16, 2019 5:37 pm
How does VG do in terms of handling tax lots for MF conversions to ETF?

I have large taxable holdings in admiral funds. If I lose tax lot accounting or it gets messy, the conversion will not be worth it.
Each MF lot is converted individually. So you'll have the same number of lots (the ETF lots will be fractional i.e. 2.76).

Uncovered shares (MF shares before 2012) will be combined into one lot I believe.

Formula for each lot conversion is:
MFshares * mfPrice / etfPrice
I haven't sold any yet, but yes it should be very easy and the same as if you had bought ETFs in the first place.

I believe this is what happens: You won't be selling partial lots. ETFs you can only buy or sell in whole numbers. Any extra fractional shares will be left over.

For example, say you have 6.2 shares of the ETF in four lots:
1.1
2.9
1.5
0.7

If you want to sell 5 shares, the first two lots will be completely sold, and the third lot will have 0.5 shares left over (for a total of 1.2 shares left in two lots). If you ever go under 1 share, Vanguard just liquidates it and pays you cash.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by hagridshut » Tue Jul 16, 2019 7:23 pm

Vanguard keeps sending emails encouraging conversion of funds to ETFs and it is splashed all over the web page upon login.

I am feeling pressured by this and it is making me upset. I feel like they are trying to take some advantage over me through this. Why keep pushing and pushing? I never felt this way before about Vanguard. Maybe the company has just fundamentally shifted away from Jack Bogle over the past 2 decades.

This feels like part of a plan that has been happening since the “mandatory” conversion to a brokerage platform.
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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by vineviz » Tue Jul 16, 2019 7:39 pm

hagridshut wrote:
Tue Jul 16, 2019 7:23 pm
I am feeling pressured by this and it is making me upset. I feel like they are trying to take some advantage over me through this.
Is it possible you're assigning a motive to Vanguard that isn't necessarily there? It's always possible that some customers will experience some corporate communication more than others, just by chance.

And remember, the initiative they are making you aware of is one that will save you money. Maybe only a minuscule amount of money, but it's still money saved.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by jeffyscott » Wed Jul 17, 2019 8:12 am

For those who prefer mutual funds, they may find substitutes from other sources, such as Fidelity and Schwab, where there may be a mutual fund with an ER less than that for Vanguard's ETF.

Though this may not make sense for taxable accounts, due to Vanguard's ETF structure which makes their mutual funds more tax-efficient that others.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by schooner » Wed Jul 17, 2019 9:10 am

hagridshut wrote:
Tue Jul 16, 2019 7:23 pm
Vanguard keeps sending emails encouraging conversion of funds to ETFs and it is splashed all over the web page upon login.

I am feeling pressured by this and it is making me upset. I feel like they are trying to take some advantage over me through this. Why keep pushing and pushing? I never felt this way before about Vanguard. Maybe the company has just fundamentally shifted away from Jack Bogle over the past 2 decades.

This feels like part of a plan that has been happening since the “mandatory” conversion to a brokerage platform.
You're not alone. I'm a Vanguard investor and I feel the same way.

Bogle taught us to stay the course, even in rough seas.

It's been a 10+ year bull market and investors seem to get kind of euphoric. Bogle observed:

"ETFs are one of the—are probably the greatest financial innovation of the 21st century. They are probably also the worst investment innovation of the 20th century, because people use ETFs badly. And the sponsorship is wild. Henry Kaufman would call them, if he were around at this meeting today, he would call them financial buccaneers."

Stay the course with traditional index mutual funds! Vanguard is a business and it's making business decisions. Nothing wrong with that, but you're allowed to advocate for yourself as a customer.

Oh and, may I point out, Vanguard quietly lowered the expense ratios on their institutional shares to match ETFs. The "smart money" at Vanguard isn't jumping on the ETF ship anytime soon.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by jeffyscott » Wed Jul 17, 2019 9:34 am

schooner wrote:
Wed Jul 17, 2019 9:10 am
Oh and, may I point out, Vanguard quietly lowered the expense ratios on their institutional shares to match ETFs. The "smart money" at Vanguard isn't jumping on the ETF ship anytime soon.
And outside Vanguard others have, not so quietly, collapsed their mutual fund share classes so that individuals pay the institutional ER.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Northern Flicker » Wed Jul 17, 2019 11:48 am

ETFs are one of the—are probably the greatest financial innovation of the 21st century. They are probably also the worst investment innovation of the 20th century, because people use ETFs badly.
The biggest benefit of ETFs is that a buy and hold investor is shielded from the effects of active traders moving money in and out of the fund. You would not want the type of trading that is described as using ETFs badly going on in your mutual fund, so ETFs provides a way for day traders, market timers, and speculators to play to their heart’s content without affecting other investors in the same fund. So the existence of ETFs is helpful to mutual fund investors. Of course there is no imperative to use the product badly.

An interesting point is that Vanguard Brokerage allows investors to hold fractional shares of Vanguard ETFs. You cannot trade the fractional shares. If you convert mutual fund shares for a fund with an ETF share class to ETF shares, Vanguard will create the needed fractional shares so that the full amount held in the mutual fund is converted. If and when you sell the last whole share of the holding, leaving only the fraction of a share still held, Vanguard will liquidate the remaining fraction and deposit the cash for it in your settlement account.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by jhfenton » Wed Jul 17, 2019 12:02 pm

JustinR wrote:
Tue Jul 16, 2019 6:01 pm
Each MF lot is converted individually. So you'll have the same number of lots (the ETF lots will be fractional i.e. 2.76).

Uncovered shares (MF shares before 2012) will be combined into one lot I believe.

Formula for each lot conversion is:
MFshares * mfPrice / etfPrice
+1

And more precisely: ETFShares = ROUND( ROUND(MFShares * MFPrice, 2) / ETFNAV, 3)

In particular, they use ETFNAV rather than ETFPrice.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Hector » Wed Jul 17, 2019 2:30 pm

I think mutual fund is more convenient compare to ETF for rebalancing and tax loss/gain harvesting. You place an order to exchange fund X for fund Y and it is executed based on end of the day closing price. When you do the same transaction via ETF, it is likely that you are going to give up some basis point.

Same for dividend reinvestment. If you do auto reinvestment of ETF, aren't you place market order? If you are doing this manually, aren't you staying out of market for a bit?
Last edited by Hector on Wed Jul 17, 2019 5:15 pm, edited 1 time in total.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Angst » Wed Jul 17, 2019 3:26 pm

Northern Flicker wrote:
Wed Jul 17, 2019 11:48 am
An interesting point is that Vanguard Brokerage allows investors to hold fractional shares of Vanguard ETFs. You cannot trade the fractional shares. If you convert mutual fund shares for a fund with an ETF share class to ETF shares, Vanguard will create the needed fractional shares so that the full amount held in the mutual fund is converted. If and when you sell the last whole share of the holding, leaving only the fraction of a share still held, Vanguard will liquidate the remaining fraction and deposit the cash for it in your settlement account.
I think pretty much any brokerage will allow fractional shares of most ETFs, just like individual stocks. If you have dividends automatically reinvested you will periodically accrue additional lots of fractional shares, in stocks and ETFs alike.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by jhfenton » Fri Nov 15, 2019 8:33 pm

I looked and hadn't seen any discussion of the impending expense changes for Vanguard's Sector Bond Index Funds*. Per the August 31, 2019 annual report released last month (PDF), the ETFs for the bond index funds are likely going to have ERs of 3 bp vs 7 bp for the Admiral Shares (and 5 bp for the Institutional Shares) (see the bottom of page 5) when the new prospectus comes out in December.

This is even more stark evidence that Vanguard is changing their approach to allocating expenses among the share classes. The 4 bp spread matches the largest gap on any existing fund (12 bp vs 16 bp for VSS vs VFSAX/FTSE All-world ex-US Small Cap), and as a percentage, it is by far the largest gap.

* The Sector Bond Index Funds are the Short-Term, Intermediate-Term and Long-Term Treasury Index Funds; the Short-Term, Intermediate-Term and Long-Term Corporate Bond Index Funds; and the Mortgage-Backed Securities Index Fund.

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Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by gjlynch17 » Sat Nov 16, 2019 11:06 am

jhfenton wrote:
Fri Nov 15, 2019 8:33 pm
I looked and hadn't seen any discussion of the impending expense changes for Vanguard's Sector Bond Index Funds*. Per the August 31, 2019 annual report released last month (PDF), the ETFs for the bond index funds are likely going to have ERs of 3 bp vs 7 bp for the Admiral Shares (and 5 bp for the Institutional Shares) (see the bottom of page 5) when the new prospectus comes out in December.

This is even more stark evidence that Vanguard is changing their approach to allocating expenses among the share classes. The 4 bp spread matches the largest gap on any existing fund (12 bp vs 16 bp for VSS vs VFSAX/FTSE All-world ex-US Small Cap), and as a percentage, it is by far the largest gap.

* The Sector Bond Index Funds are the Short-Term, Intermediate-Term and Long-Term Treasury Index Funds; the Short-Term, Intermediate-Term and Long-Term Corporate Bond Index Funds; and the Mortgage-Backed Securities Index Fund.
Great information. Thanks for sharing. You are correct that this is a big change in Vanguard's approach to expense allocation in favor of ETFs. On the broader landscape, this appears to be a move to not only push investors away from mutual funds towards ETFs, but also to take market share from Blackrock's iShares. Vanguard's corporate bond ETFs have more AUM than iShares but iShares is the leader in Treasury ETFs. A 3bp ER for Vanguard compares favorably to not only iShares 15bp comparable Treasury funds but also their comparable corporate funds at 6bp. It is a good time to be an investor.

Lyrrad
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Joined: Sun Jul 27, 2008 10:59 am

Re: Full list of Vanguard ETFs that are cheaper than their index funds?

Post by Lyrrad » Sat Nov 16, 2019 5:43 pm

jhfenton wrote:
Fri Nov 15, 2019 8:33 pm
I looked and hadn't seen any discussion of the impending expense changes for Vanguard's Sector Bond Index Funds*. Per the August 31, 2019 annual report released last month (PDF), the ETFs for the bond index funds are likely going to have ERs of 3 bp vs 7 bp for the Admiral Shares (and 5 bp for the Institutional Shares) (see the bottom of page 5) when the new prospectus comes out in December.

This is even more stark evidence that Vanguard is changing their approach to allocating expenses among the share classes. The 4 bp spread matches the largest gap on any existing fund (12 bp vs 16 bp for VSS vs VFSAX/FTSE All-world ex-US Small Cap), and as a percentage, it is by far the largest gap.
I think it's possible that the actual spread reported, and going forward will be 2 bp, since over the past two 6 month periods reported there was no expense difference for six months (ETF vs Admiral), and 4 bp for the following six months. Something similar happened last year with the VTI/VTSAX. For the first six months of 2018, the VTI and VTSAX had expenses at 4bp each. For the last six months of 2018, VTI reported expenses of 2bp, averaging 3 bp for the year. So far this year, VTI has been charging 3 bp.

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