Vanguard phasing out regular mutual fund shares?

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MnD
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Vanguard phasing out regular mutual fund shares?

Post by MnD » Sat Dec 28, 2019 7:04 pm

Has anyone noticed that for the index ETF funds that Vanguard has launched after 2016, that _none_ of them have any corresponding mutual fund shares? One could speculate that Vanguard has made a policy decision going forward to twilight traditional mutual fund shares for index products by not issuing any new ones and using expense ratio differences (Admiral shares now more expensive to hold than ETF shares) to direct new sales to ETF's and encourage conversions of existing Admiral to ETF class.

Note that all four "stand alone" ETF products are total or very broad index funds with thousands of securities in each fund and could certainly end up as core products for long-term investors - not some niche ETF product appealing to sector or country traders.

Vanguard Total Corporate Bond ETF (VTC) 11/7/2017
Vanguard Total World Bond ETF (BNDW) 9/4/2018
Vanguard ESG U.S. Stock ETF (ESGV) 9/18/2018
Vanguard ESG International Stock ETF (VSGX) 9/18/2018

I did not click on every ETF on this list but looked at a bunch and all I checked that started before before 2017 have both ETF and mutual fund class shares and none after.
https://investor.vanguard.com/etf/list# ... nd-returns
Last edited by MnD on Sat Dec 28, 2019 8:05 pm, edited 3 times in total.
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Re: Vanguard phasing out regular mutual fund shares?

Post by 02nz » Sat Dec 28, 2019 7:12 pm

It's also interesting that you can convert from mutual fund shares to ETFs, but not the other way around. Presumably there's no legal/regulatory reason why you couldn't, as they are share classes of the same funds. But Vanguard doesn't allow it.

I doubt that Vanguard would ever phase out regular mutual fund shares completely. Such a change would affect a lot of people and require semi-functional IT to implement. And ETFs are more portable and so shareholders would then no longer be stuck with Vanguard customer service. :P
Last edited by 02nz on Sat Dec 28, 2019 7:14 pm, edited 1 time in total.

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Re: Vanguard phasing out regular mutual fund shares?

Post by whodidntante » Sat Dec 28, 2019 7:14 pm

ETFs are structurally more efficient than mutual funds and reduce costs for Vanguard. As low cost zealots we should embrace ETFs and abandon mutual funds.

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Re: Vanguard phasing out regular mutual fund shares?

Post by Trader Joe » Sat Dec 28, 2019 7:21 pm

MnD wrote:
Sat Dec 28, 2019 7:04 pm
Has anyone noticed that for the index ETF funds that Vanguard has launched after 2016, that _none_ of them have any corresponding mutual fund shares? One could speculate that Vanguard has made a policy decision going forward to twilight traditional mutual fund shares for index products by not issuing any new ones and using expense ratio differences (Admiral shares now more expensive to hold than ETF shares) to direct new sales to ETF's and encourage conversions of existing Admiral to ETF class.

Note that all four "stand alone" ETF products are total or very broad index funds with thousands of securities in each fund and could certainly end up as core products for long-term investors - not some niche ETF product appealing to sector or country traders.

Vanguard Total Corporate Bond ETF (VTC) 11/7/2017
Vanguard Total World Bond ETF (BNDW) 9/4/2018
Vanguard ESG U.S. Stock ETF (ESGV) 9/18/2018
Vanguard ESG International Stock ETF (VSGX) 9/18/2018

I did not click on every ETF on this list but looked at a bunch and all I checked that started before before 2017 have both ETF and mutual fund class shares and none after.
https://investor.vanguard.com/etf/list# ... nd-returns

Update - I did some more clicking and the Russell series of ETF's do not have fund pairs, nor does EDV. But the vast majority of pre-2017 ETF's have Admiral pairs, and none after 2017.
No, speaking for myself, I have not noticed. As a decades long investor in Vanguard's mutual funds (VFIAX or VTSAX) I have no need or desire to look at ETF related activity.

I will never invest in any ETF (Vanguard or otherwise).

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Re: Vanguard phasing out regular mutual fund shares?

Post by nisiprius » Sat Dec 28, 2019 9:30 pm

Yes, I had noticed, along with other indications of an emphasis on ETFs. It seems as if they've constantly had something about ETFs in their home page highlights or rotating adlets or whatever you'd call 'em for some time now... for example, as I write this:

Image

And since I personally like mutual funds and dislike ETFs, it doesn't thrill me, but I don't view it with much alarm, either. I don't want to buy any of the ETF-only products... and if I did, I'd shrug and cuss mildly and buy the ETF.

But, yes, I do think there's something going on. Whether they actually want to shift customers to ETFs, or whether they just want to seem kewl and appeal to the youthful Wealthfront/Betterment/Robinhood crowd, I don't know.
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Re: Vanguard phasing out regular mutual fund shares?

Post by blueskytoo » Sat Dec 28, 2019 10:47 pm

To me, the advantage of mutual funds is the option of automatic reinvestment of gains in the fund, with no need for the investor to take any action. :happy

The advantage of ETF's, is the monthly, quarterly, and annual reports have unchanging numbers of shares, unless you buy some more. Checking for any errors is thus easy. :D

Difference in fees is often small enough to ignore on similar Vanguard products.

The ETF's are obviously less costly for Vanguard to administer, as they do not need to do the reinvesting for us when there are gains paid out. For this reason, they will have lower fees on the ETF products. :greedy

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Re: Vanguard phasing out regular mutual fund shares?

Post by onourway » Sat Dec 28, 2019 11:03 pm

A huge proportion of Vanguard’s new money must come from regularly scheduled contributions.

How can they be all-in on pushing ETF’s without providing a mechanism to automate these purchases?

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Re: Vanguard phasing out regular mutual fund shares?

Post by Silence Dogood » Sat Dec 28, 2019 11:41 pm

MnD wrote:
Sat Dec 28, 2019 7:04 pm
I did not click on every ETF on this list but looked at a bunch and all I checked that started before before 2017 have both ETF and mutual fund class shares and none after.
Vanguard got a new CEO in 2018.

Coincidence?

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Re: Vanguard phasing out regular mutual fund shares?

Post by Sheepdog » Sat Dec 28, 2019 11:42 pm

Trader Joe wrote:
Sat Dec 28, 2019 7:21 pm

I have no need or desire to look at ETF related activity.

I will never invest in any ETF (Vanguard or otherwise).
Yes, me too. Thank you.
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Re: Vanguard phasing out regular mutual fund shares?

Post by anil686 » Sat Dec 28, 2019 11:45 pm

As the previous poster pointed out - Buckley gave an interview on Bloomberg with Barry Ritholz and said ETFs are cheaper for VG and thus are cheaper for VG investors than mutual funds. ETFs are less costly to administer and thus provide investors more savings. Not my opinion but those of the CEO in that interview FWIW. BTW, he also said that VG continues to provide MF but says investors who are cost conscious will probably gravitate to ETFs as they will be separating fees to be reflective of costs....

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Re: Vanguard phasing out regular mutual fund shares?

Post by Silence Dogood » Sat Dec 28, 2019 11:52 pm

anil686 wrote:
Sat Dec 28, 2019 11:45 pm
As the previous poster pointed out - Buckley gave an interview on Bloomberg with Barry Ritholz and said ETFs are cheaper for VG and thus are cheaper for VG investors than mutual funds. ETFs are less costly to administer and thus provide investors more savings. Not my opinion but those of the CEO in that interview FWIW. BTW, he also said that VG continues to provide MF but says investors who are cost conscious will probably gravitate to ETFs as they will be separating fees to be reflective of costs....
I think that costs are less important than investor returns.

Is there any data that shows how ETF investors do compared to mutual fund investors?

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Re: Vanguard phasing out regular mutual fund shares?

Post by anil686 » Sun Dec 29, 2019 12:04 am

Silence Dogood wrote:
Sat Dec 28, 2019 11:52 pm
anil686 wrote:
Sat Dec 28, 2019 11:45 pm
As the previous poster pointed out - Buckley gave an interview on Bloomberg with Barry Ritholz and said ETFs are cheaper for VG and thus are cheaper for VG investors than mutual funds. ETFs are less costly to administer and thus provide investors more savings. Not my opinion but those of the CEO in that interview FWIW. BTW, he also said that VG continues to provide MF but says investors who are cost conscious will probably gravitate to ETFs as they will be separating fees to be reflective of costs....
I think that costs are less important than investor returns.

Is there any data that shows how ETF investors do compared to mutual fund investors?
I am not sure. Maybe somebody can elucidate why ETFs are cheaper for VG to run than MF. I am not sure why they are so different to run per se. As far as investor returns, I think there have been several podcasts on both Bloomberg and Morningstar that have found difficulty in comparing returns btw ETFs and MF investors. Frankly, a few bp doesn’t bother me - I like the automated feature of MF investing for me....

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Re: Vanguard phasing out regular mutual fund shares?

Post by abuss368 » Sun Dec 29, 2019 12:15 am

And yet Vanguard has not fixed their “year to date” account statement problem for the brokerage accounts. Why is something so simple so difficult?

Mutual fund accounts have a true year to date statement that shows all activity for the year on the final statement. Not ETF!

Come on Vanguard. No one wants 12 statements a year for each account.

I’ll bet if they fixed this more folks would transition.
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Re: Vanguard phasing out regular mutual fund shares?

Post by Silence Dogood » Sun Dec 29, 2019 12:20 am

Costs matter. Costs matter a lot. Costs matter so much that it's the first thing I notice about a fund.

But small differences in costs? A few basis points? It just doesn't matter much.

I prefer mutual funds over ETFs.

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Re: Vanguard phasing out regular mutual fund shares?

Post by shess » Sun Dec 29, 2019 12:26 am

onourway wrote:
Sat Dec 28, 2019 11:03 pm
A huge proportion of Vanguard’s new money must come from regularly scheduled contributions.

How can they be all-in on pushing ETF’s without providing a mechanism to automate these purchases?
I'm all-in on this. I was excited a few months ago to see that there was a mechanism to automatically do things with dividends. Then I spent a few minutes going back and forth trying to figure out why I couldn't select my ETF shares. Turns out you can do things with your mutual funds that you can't do with your ETFs. I'm sure that's cheaper for Vanguard, too, but it's annoying for me.

(off the top of my head, I think it was to direct dividends into a mutual fund other than sweep, or to ACH to your bank)

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Re: Vanguard phasing out regular mutual fund shares?

Post by 22twain » Sun Dec 29, 2019 12:29 am

blueskytoo wrote:
Sat Dec 28, 2019 10:47 pm
To me, the advantage of mutual funds is the option of automatic reinvestment of gains in the fund, with no need for the investor to take any action. :happy
Surely most brokerages allow automatic reinvestment of dividends and capital gain distributions in the same ETF. I do it, or have done it, at T Rowe Price with Vanguard's major ETFs: VTI, VXUS, VT, BND.
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Re: Vanguard phasing out regular mutual fund shares?

Post by beyou » Sun Dec 29, 2019 12:38 am

They are simply creating products people want to buy, and ETFs are what is cheap/free to buy for those who care about costs (and therefore use discount brokers).

The industry has highly automated efficient mechanisms to trade ETFs (same as stocks), but much less automated and fair handling of funds (at least when traded at a broker vs directly with the fund manager in an “old platform” style account).

This is no surprise. In fact if you go back to the 1920s, people were investing in exchange traded funds (close end funds they were called) and open end funds were just getting started. So if anything it is open end funds that are the new yet also legacy product !

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Re: Vanguard phasing out regular mutual fund shares?

Post by shess » Sun Dec 29, 2019 12:57 am

shess wrote:
Sun Dec 29, 2019 12:26 am
onourway wrote:
Sat Dec 28, 2019 11:03 pm
A huge proportion of Vanguard’s new money must come from regularly scheduled contributions.

How can they be all-in on pushing ETF’s without providing a mechanism to automate these purchases?
I'm all-in on this. I was excited a few months ago to see that there was a mechanism to automatically do things with dividends. Then I spent a few minutes going back and forth trying to figure out why I couldn't select my ETF shares. Turns out you can do things with your mutual funds that you can't do with your ETFs. I'm sure that's cheaper for Vanguard, too, but it's annoying for me.

(off the top of my head, I think it was to direct dividends into a mutual fund other than sweep, or to ACH to your bank)
Darn - it took me this many months to realize that if I hold my Vanguard ETFs elsewhere, I could accomplish the ACH bit of things. That would make me even CHEAPER for Vanguard to deal with!

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Re: Vanguard phasing out regular mutual fund shares?

Post by dmcmahon » Sun Dec 29, 2019 1:03 am

Some account types cannot buy ETFs. For example the 529 accounts. Some funds don't have an ETF equivalent. For example VCADX.

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Re: Vanguard phasing out regular mutual fund shares?

Post by asset_chaos » Sun Dec 29, 2019 1:42 am

Of the four ETFs mentioned in the OP, it is remarkable that total world bond exists as both mutual fund and ETF from Vanguard outside the US. For example, I use the mutual fund version of total world bond in my Australian retirement fund. But also noteworthy is that the Vanguard ex-US world bond funds have existed since, I think, around 2010.

I hadn't noticed Vanguard creating only new ETfs the past couple of years. I'm also not sure it's true. If I go to a page of Vanguard products and ask to display only mutual funds and search the "since inception" returns column for "2018" and "2019", I find a bunch of recently launched funds in the traditional mutual fund format:

U.S. Multifactor Fund, Admiral shares

Global Credit Bond Fund, Admiral and Investor shares

High Dividend Yield Index Fund, Admiral shares

S&P 500 Growth Index Fund, Institutional shares

FTSE Social Index Fund, Admiral shares

Total World Stock Index Fund, Admiral shares

FTSE All-World ex-US Small-Cap Index Fund, Admiral shares

International Core Stock Fund, Admiral and Investor shares

Global ESG Select Stock Fund, Admiral and Investor shares

High Dividend Yield Index Fund, Admiral shares

Long-Term Bond Index Fund, Admiral shares

Commodity Strategy Fund, Admiral shares

Even discounting the institutional fund and a couple of older funds that introduced admiral shares recently, that's still a far cry from none.
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Re: Vanguard phasing out regular mutual fund shares?

Post by asset_chaos » Sun Dec 29, 2019 1:46 am

blueskytoo wrote:
Sat Dec 28, 2019 10:47 pm
To me, the advantage of mutual funds is the option of automatic reinvestment of gains in the fund, with no need for the investor to take any action. :happy
I think you can reinvest dividends into the same ETF. I have an ETF and can set it to reinvest dividends. What I cannot do is redirect the ETF dividends to any fund other than the settlement fund. If I want the ETF dividends to automatically go into my bond index mutual fund, I can't.
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Re: Vanguard phasing out regular mutual fund shares?

Post by FrugalInvestor » Sun Dec 29, 2019 1:58 am

abuss368 wrote:
Sun Dec 29, 2019 12:15 am
And yet Vanguard has not fixed their “year to date” account statement problem for the brokerage accounts. Why is something so simple so difficult?

Mutual fund accounts have a true year to date statement that shows all activity for the year on the final statement. Not ETF!

Come on Vanguard. No one wants 12 statements a year for each account.

I’ll bet if they fixed this more folks would transition.
Once, many years ago, Vanguard induced me to switch to a brokerage account. As soon as I realized that I had to keep all the monthly statements to have complete records I called and demanded to switch back, which to Vanguard's credit they allowed me to do. I would have no problem moving back to a brokerage account if I could get a single year-end statement to file rather than twelve month-end statements.

As an aside I was also told at the time that I could never go back to a brokerage account if they honored my request to go back to the old statement format. I plan to use that against them if and when they tell me that I must switch someday. :)
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Re: Vanguard phasing out regular mutual fund shares?

Post by AlohaJoe » Sun Dec 29, 2019 2:15 am

anil686 wrote:
Sat Dec 28, 2019 11:45 pm
BTW, he also said that VG continues to provide MF but says investors who are cost conscious will probably gravitate to ETFs as they will be separating fees to be reflective of costs....
Ironically, when Vanguard introduced the dual-share structure they said that market timers would move to ETFs, which would dramatically lower costs for the mutual funds. Guess it hasn't quite worked out that way.

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Re: Vanguard phasing out regular mutual fund shares?

Post by watchnerd » Sun Dec 29, 2019 2:18 am

All of my tax sheltered accounts at Vanguard use ETFs, mostly Vanguard ETFs, but a few from iShares.

Generally, I prefer the quick execution of ETF trades vs mutual funds, and especially the lack of trading restrictions one gets with some of the Admiral bond funds.

The main downside for me:

No auto invest for ETFs

So for those transactions, I have to use mutual funds (although usually for things I also hold the ETF version for).
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Re: Vanguard phasing out regular mutual fund shares?

Post by watchnerd » Sun Dec 29, 2019 2:21 am

FrugalInvestor wrote:
Sun Dec 29, 2019 1:58 am


Once, many years ago, Vanguard induced me to switch to a brokerage account. As soon as I realized that I had to keep all the monthly statements to have complete records I called and demanded to switch back, which to Vanguard's credit they allowed me to do. I would have no problem moving back to a brokerage account if I could get a single year-end statement to file rather than twelve month-end statements.

As an aside I was also told at the time that I could never go back to a brokerage account if they honored my request to go back to the old statement format. I plan to use that against them if and when they tell me that I must switch someday. :)
I've never in my life had an old school mutual fund account.

I've always used online brokerages since the late 1990s.

What are the differences in record keeping?

I've always been able to find everything I need to file taxes from every online broker I've had.
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Re: Vanguard phasing out regular mutual fund shares?

Post by cbus_runner » Sun Dec 29, 2019 5:11 am

nisiprius wrote:
Sat Dec 28, 2019 9:30 pm
Yes, I had noticed, along with other indications of an emphasis on ETFs. It seems as if they've constantly had something about ETFs in their home page highlights or rotating adlets or whatever you'd call 'em for some time now... for example, as I write this:

Image

And since I personally like mutual funds and dislike ETFs, it doesn't thrill me, but I don't view it with much alarm, either. I don't want to buy any of the ETF-only products... and if I did, I'd shrug and cuss mildly and buy the ETF.

But, yes, I do think there's something going on. Whether they actually want to shift customers to ETFs, or whether they just want to seem kewl and appeal to the youthful Wealthfront/Betterment/Robinhood crowd, I don't know.
Could the push for ETF be related to the dual share class structure? My (very limited) understanding is vanguard can eliminate unrealized mutual capital gains by pushing it to its ETF counterpart. And maybe they need a continued supply of new ETF buyers to create new units to offload the capital gains? I assume with the long bull run and aging clientele entering retirement, there could be higher risk of redemptions going forward, which could force vanguard to distribute capital gains to existing ETF and mutual fund owners. And maybe they are just being prudent.

But again, I’m no expert. Just piecing together clues based on vanguards actions (pushing ETFs) and articles I’ve read over the years. Like this one:

https://www.morningstar.com/articles/85 ... guard-etfs

I could just be completely wrong. And maybe it’s just a way to save money on operating costs and nothing more.

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Re: Vanguard phasing out regular mutual fund shares?

Post by nisiprius » Sun Dec 29, 2019 6:56 am

Suggestions of literal "phasing out" seem wildly premature to me. Currently, for the whole industry, there is five times as much invested in mutual funds as in ETFs. Source: 2019 Investment Company Fact Book

Even plotted on a semilog chart, the data suggests both that "if the trend continues" eventually ETFs will surpass mutual funds, but also that it won't be any time very soon. And even after they surpass mutual funds that doesn't mean they will quickly supersede them. I don't remember when the ICI factbooks come out but I suppose in a few months we'll be able to see if anything dramatic happened last year with regard to their growth rates.

Lines on the chart are extrapolations based on year-end 2008 and 2018. The choice of 2008 was made arbitrarily.

Image

Here's another reason to doubt any "phasing out." Consider the history of Vanguard mutual funds that have no real reason for existence, the most glaring case in point being the Vanguard FTSE All-World Ex-US index fund (VFWIX/VFWAX/VEU). This fund was probably created as a stopgap in order to be able to provide the corresponding ETF. At that time, Vanguard Total International as a fund-of-funds and they said that regulations do not allow an ETF-of-funds. Over a period of several years Total International was revamped into a regular fund holding stocks directly and the ETF VXUS was launched as a share class of VGTSX/VTIAX. From that point on, it was difficult to see any good reason for the continued existence of Vanguard FTSE All-World Ex-US. The two funds are almost identical, and every difference is microscopically in favor of Total International. Vanguard began to downplay it.

Currently, Vanguard Total International holds $400 billion in assets, while Vanguard FTSE All-World Ex-US has "only" $40 billion. Vanguard continues to operate it even though Total International is ten times as big.

And I think Vanguard will continue to operate mutual funds with tens of billions of dollars in them even if their corresponding ETFs were to become ten times as big.
Last edited by nisiprius on Sun Dec 29, 2019 10:54 am, edited 2 times in total.
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Re: Vanguard phasing out regular mutual fund shares?

Post by nisiprius » Sun Dec 29, 2019 7:07 am

cbus_runner wrote:
Sun Dec 29, 2019 5:11 am
Could the push for ETF be related to the dual share class structure?
The business processes enabling the dual share class structure were patented, and I'm thinking those patents must have expired. The first "VIPER" as the ETFs were once known, VTI, was introduced in 2001 and patents expire in 17 years. But I think there may have been later patents too. I haven't seen any indications of any other firm trying to duplicate the dual-share structure. I can't think of any good reason why the patent expiration would encourage the creation of ETF-only products.
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Re: Vanguard phasing out regular mutual fund shares?

Post by mmcmonster » Sun Dec 29, 2019 7:07 am

watchnerd wrote:
Sun Dec 29, 2019 2:18 am
[...]
The main downside for me:

No auto invest for ETFs

So for those transactions, I have to use mutual funds (although usually for things I also hold the ETF version for).
You can definitely do dividend re-investment of ETFs. I just checked one of my holdings. I have 233.928 shares of VHT (Vanguard Health Care ETF).

What you can't do is buy fractional shares of ETFs with new money. If I could (hopefully possible some time in the near future), I would convert all my mutual funds to ETFs.

Come to think of it, I've got quite a few shares of S&P 500 ETF and MF (from before I started buying Total Stock Market). Maybe I'll convert the MF to ETF just to simplify matters... :D

Who says this thread isn't actionable! :beer

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Re: Vanguard phasing out regular mutual fund shares?

Post by columbia » Sun Dec 29, 2019 7:44 am

Phasing out? Unlikely.

Steering folks - especially new customers - to ETFs? Clearly.

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Re: Vanguard phasing out regular mutual fund shares?

Post by HawkeyePierce » Sun Dec 29, 2019 9:08 am

It’s only a matter of time before one of Vanguard/Fidelity/Schwab allows automatic whole-dollar purchase of ETFs with predictable (ie at or very close to NAV) execution.

My money is on Schwab launching this by the end of the 2020.

Part of me even wonders if Vanguard wants out of the brokerage business entirely. I’m sure they’d love for us all to hold their funds elsewhere. Gets them out of providing that pesky customer service.

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Re: Vanguard phasing out regular mutual fund shares?

Post by skylar » Sun Dec 29, 2019 9:17 am

I strongly prefer regular mutual funds over ETFs for their simplicity. I don't have to think about market liquidity, order type, IIV, etc. - I can just send money and know that I'll be getting the best price on that day. My memory is that all of the funds that have both admiral shares and ETFs have very little difference in ER so I ETFs can't be *that* much more efficient for Vanguard to run.

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Re: Vanguard phasing out regular mutual fund shares?

Post by Mako » Sun Dec 29, 2019 9:39 am

nisiprius wrote:
Sun Dec 29, 2019 7:07 am
The business processes enabling the dual share class structure were patented, and I'm thinking those patents must have expired. The first "VIPER" as the ETFs were once known, VTI, was introduced in 2001 and patents expire in 17 years. But I think there may have been later patents too. I haven't seen any indications of any other firm trying to duplicate the dual-share structure. I can't think of any good reason why the patent expiration would encourage the creation of ETF-only products.
Today patents are 20 years from filing. The earliest one I’m aware of, below, was filed in 2001 so would expire in 2021. However, it also has a term extension as seen in the front (due to Patent Office delay) so doesn’t expire until 2023.

I recall there were other patents as well, but if they are the same subject probably also claim the 2001 date.

https://patentimages.storage.googleapis ... 879964.pdf

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JoMoney
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Re: Vanguard phasing out regular mutual fund shares?

Post by JoMoney » Sun Dec 29, 2019 9:52 am

HawkeyePierce wrote:
Sun Dec 29, 2019 9:08 am
It’s only a matter of time before one of Vanguard/Fidelity/Schwab allows automatic whole-dollar purchase of ETFs with predictable (ie at or very close to NAV) execution.

My money is on Schwab launching this by the end of the 2020....
There used to be a handful of brokerages that offered this. ShareBuilder was one of the bigger ones, before ING's U.S. business was bought by CapitalOne who closed the brokerage. You paid a monthly fee and your portfolio of stocks and/or ETFs were automatically purchased. Fractional shares were allowed, and everyone buying those stocks got an 'average' of the price paid, that was some average price throughout the day (not specifically open or close price - which is one of the nice parts about TIFs making tracking your specific performance easier).
I believe https://www.folioinvesting.com/ is still around and does something like this, but their monthly fee is a bit more than the "free" trading now being offered with many brokerages.
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Re: Vanguard phasing out regular mutual fund shares?

Post by 3funder » Sun Dec 29, 2019 9:57 am

Silence Dogood wrote:
Sun Dec 29, 2019 12:20 am
Costs matter. Costs matter a lot. Costs matter so much that it's the first thing I notice about a fund.

But small differences in costs? A few basis points? It just doesn't matter much.

I prefer mutual funds over ETFs.
+1

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Re: Vanguard phasing out regular mutual fund shares?

Post by stan1 » Sun Dec 29, 2019 9:58 am

HawkeyePierce wrote:
Sun Dec 29, 2019 9:08 am
Part of me even wonders if Vanguard wants out of the brokerage business entirely. I’m sure they’d love for us all to hold their funds elsewhere. Gets them out of providing that pesky customer service.
Exactly, when was the last time anyone called Blackrock or State Street for customer service? Vanguard is actually better off if their customers take Vanguard ETFs to Fidelity or Schwab and use their customer service and perks.

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Re: Vanguard phasing out regular mutual fund shares?

Post by JoMoney » Sun Dec 29, 2019 10:05 am

I will point out, that Vanguard has several active mutual funds, and while there's no rule against active ETF's they're not well suited to the creation/redemption process and impossible to close the fund to new investors.
Since Vanguard is owned by the funds it provides services to, I think that makes for another roadblock to the idea of completely "phasing out" traditional mutual funds.
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Re: Vanguard phasing out regular mutual fund shares?

Post by Silence Dogood » Sun Dec 29, 2019 10:14 am

stan1 wrote:
Sun Dec 29, 2019 9:58 am
HawkeyePierce wrote:
Sun Dec 29, 2019 9:08 am
Part of me even wonders if Vanguard wants out of the brokerage business entirely. I’m sure they’d love for us all to hold their funds elsewhere. Gets them out of providing that pesky customer service.
Exactly, when was the last time anyone called Blackrock or State Street for customer service? Vanguard is actually better off if their customers take Vanguard ETFs to Fidelity or Schwab and use their customer service and perks.
Why would an investor at Fidelity choose a Vanguard ETF over a Fidelity zero-cost mutual fund?

It's hard to imagine that Fidelity and Schwab won't eventually nudge people (carrots and sticks) to use their own funds.

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Re: Vanguard phasing out regular mutual fund shares?

Post by JoMoney » Sun Dec 29, 2019 10:21 am

Silence Dogood wrote:
Sun Dec 29, 2019 10:14 am
stan1 wrote:
Sun Dec 29, 2019 9:58 am
HawkeyePierce wrote:
Sun Dec 29, 2019 9:08 am
Part of me even wonders if Vanguard wants out of the brokerage business entirely. I’m sure they’d love for us all to hold their funds elsewhere. Gets them out of providing that pesky customer service.
Exactly, when was the last time anyone called Blackrock or State Street for customer service? Vanguard is actually better off if their customers take Vanguard ETFs to Fidelity or Schwab and use their customer service and perks.
Why would an investor at Fidelity choose a Vanguard ETF over a Fidelity zero-cost mutual fund?

It's hard to imagine that Fidelity and Schwab won't eventually nudge people (carrots and sticks) to use their own funds.
In a taxable account, for myself, I would probably go with ETFs if I was not at Vanguard.
Other mutual funds tend to be slightly less well tax-managed, and ETF's are easier to transfer to a different brokerage without creating a taxable event (can you buy/hold a Fidelity Zero fund at another brokerage?).
The Zero funds are still too new and seemingly 'gimmicky' to me, and I don't trust that they won't be changed or closed in the future... it's fine for a tax-deferred account to take advantage of, but I would be a bit more careful what I put taxable investments in.
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Re: Vanguard phasing out regular mutual fund shares?

Post by HomeStretch » Sun Dec 29, 2019 10:25 am

JoMoney wrote:
Sun Dec 29, 2019 10:21 am
Silence Dogood wrote:
Sun Dec 29, 2019 10:14 am
Why would an investor at Fidelity choose a Vanguard ETF over a Fidelity zero-cost mutual fund?

It's hard to imagine that Fidelity and Schwab won't eventually nudge people (carrots and sticks) to use their own funds.
In a taxable account, for myself, I would probably go with ETFs if I was not at Vanguard.
Other mutual funds tend to be slightly less well tax-managed, and ETF's are easier to transfer to a different brokerage without creating a taxable event (can you buy/hold a Fidelity Zero fund at another brokerage?).
The Zero funds are still too new and seemingly 'gimmicky' to me, and I don't trust that they won't be changed or closed in the future... it's fine for a tax-deferred account to take advantage of, but I would be a bit more careful what I put taxable investments in.
+1. I would not use the Fidelity Zero funds in a Taxable account as they cannot be transferred to another brokerage and certain Fidelity mutual funds can be less tax efficient than ETFs or certain Vanguard mutual funds.

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Re: Vanguard phasing out regular mutual fund shares?

Post by dwickenh » Sun Dec 29, 2019 10:27 am

Sheepdog wrote:
Sat Dec 28, 2019 11:42 pm
Trader Joe wrote:
Sat Dec 28, 2019 7:21 pm

I have no need or desire to look at ETF related activity.

I will never invest in any ETF (Vanguard or otherwise).
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Re: Vanguard phasing out regular mutual fund shares?

Post by Rick Ferri » Sun Dec 29, 2019 10:29 am

Has anyone noticed that for the index ETF funds that Vanguard has launched after 2016, that _none_ of them have any corresponding mutual fund shares?
I was told by a principal at Vanguard that all ETFs have corresponding mutual fund shares, but that some of them are institutional shares that are not available to individual investors so they are not listed on the public website.

Also, for the record, it doesn't matter to me whether I own a Vanguard ETF or the mutual fund.

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Re: Vanguard phasing out regular mutual fund shares?

Post by Nummerkins » Sun Dec 29, 2019 10:33 am

I have switched my Vanguard mutual funds to their ETF counterparts. No plans to ever go back to mutual funds.

I think once employer plans crack the ETF nut that mutual funds will slowly die or just be frozen how they are. Vanguard certainly isn't developing them anymore. Every brokerage offers them for free.

I'm content paying less ER and having total portability of my funds. Bring it on!

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Re: Vanguard phasing out regular mutual fund shares?

Post by stan1 » Sun Dec 29, 2019 10:38 am

Rick Ferri wrote:
Sun Dec 29, 2019 10:29 am
Has anyone noticed that for the index ETF funds that Vanguard has launched after 2016, that _none_ of them have any corresponding mutual fund shares?
I was told by a principal at Vanguard that all ETFs have corresponding mutual fund shares, but that some of them are institutional shares that are not available to individual investors so they are not listed on the public website.

Also, for the record, it doesn't matter to me whether I own a Vanguard ETF or the mutual fund.

Rick Ferri
Rick, any thoughts on what the barrier is to broad adoption of ETFs in 401Ks as of 2020? Is it just fractional share trading of ETFs or is there a regulatory hurdle? Is the barrier that higher cost mutual funds including product placement fees offset plan administration costs?

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Re: Vanguard phasing out regular mutual fund shares?

Post by Silence Dogood » Sun Dec 29, 2019 10:39 am

HomeStretch wrote:
Sun Dec 29, 2019 10:25 am
JoMoney wrote:
Sun Dec 29, 2019 10:21 am
Silence Dogood wrote:
Sun Dec 29, 2019 10:14 am
Why would an investor at Fidelity choose a Vanguard ETF over a Fidelity zero-cost mutual fund?

It's hard to imagine that Fidelity and Schwab won't eventually nudge people (carrots and sticks) to use their own funds.
In a taxable account, for myself, I would probably go with ETFs if I was not at Vanguard.
Other mutual funds tend to be slightly less well tax-managed, and ETF's are easier to transfer to a different brokerage without creating a taxable event (can you buy/hold a Fidelity Zero fund at another brokerage?).
The Zero funds are still too new and seemingly 'gimmicky' to me, and I don't trust that they won't be changed or closed in the future... it's fine for a tax-deferred account to take advantage of, but I would be a bit more careful what I put taxable investments in.
+1. I would not use the Fidelity Zero funds in a Taxable account as they cannot be transferred to another brokerage and certain Fidelity mutual funds can be less tax efficient than ETFs or certain Vanguard mutual funds.
To be clear, I'm not making an argument about whether people should or shouldn't specifically own the Fidelity zero-cost funds.

That's sort of missing the point (look at the posts I was responding to)...

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Re: Vanguard phasing out regular mutual fund shares?

Post by MrBobcat » Sun Dec 29, 2019 10:41 am

mmcmonster wrote:
Sun Dec 29, 2019 7:07 am

What you can't do is buy fractional shares of ETFs with new money. If I could (hopefully possible some time in the near future), I would convert all my mutual funds to ETFs.
I got to think it's coming shortly with Schwab announcing in October that it would start allowing fractional share purchases. $4.95 says Fidelity is working on this too and will announce it will allow fractional share purchase shortly after Schwab goes live with it.

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Re: Vanguard phasing out regular mutual fund shares?

Post by watchnerd » Sun Dec 29, 2019 10:46 am

nisiprius wrote:
Sun Dec 29, 2019 6:56 am
Suggestions of literal "phasing out" seem wildly premature to me. Currently, industry totals, there is five times as much invested in mutual funds as in ETFs. Source: 2019 Investment Company Fact Book

Even plotted on a semilog chart, the data suggests both that "if the trend continues" eventually ETFs will surpass mutual funds, but also that it won't be any time very soon. And even after they surpass mutual funds that doesn't mean they will quickly supersede them. I don't remember when the ICI factbooks come out but I suppose in a few months we'll be able to see if anything dramatic happened last year with regard to their growth rates.

Lines on the chart are extrapolations based on year-end 2008 and 2018. The choice of 2008 was made arbitrarily.

Image

Here's another reason to doubt any "phasing out." Consider the history of Vanguard mutual funds that have no real reason for existence, the most glaring case in point being the Vanguard FTSE All-World Ex-US index fund (VFWIX/VFWAX/VEU). This fund was probably created as a stopgap in order to be able to provide the corresponding ETF. At that time, Vanguard Total International as a fund-of-funds and they said that regulations do not allow an ETF-of-funds. Over a period of several years Total International was revamped into a regular fund holding stocks directly and the ETF VXUS was launched as a share class of VGTSX/VTIAX. From that point on, it was difficult to see any good reason for the continued existence of Vanguard FTSE All-World Ex-US. The two funds are almost identical, and every difference is microscopically in favor of Total International. Vanguard began to downplay it.

Currently, Vanguard Total International holds $400 billion in assets, while Vanguard FTSE All-World Ex-US has "only" $40 billion. Vanguard continues to operate it even though Total International is ten times as big.

And I think Vanguard will continue to operate mutual funds with tens of billions of dollars in them even if their corresponding ETFs were to become ten times as big.
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Re: Vanguard phasing out regular mutual fund shares?

Post by JoMoney » Sun Dec 29, 2019 10:48 am

stan1 wrote:
Sun Dec 29, 2019 10:38 am
Rick Ferri wrote:
Sun Dec 29, 2019 10:29 am
Has anyone noticed that for the index ETF funds that Vanguard has launched after 2016, that _none_ of them have any corresponding mutual fund shares?
I was told by a principal at Vanguard that all ETFs have corresponding mutual fund shares, but that some of them are institutional shares that are not available to individual investors so they are not listed on the public website.

Also, for the record, it doesn't matter to me whether I own a Vanguard ETF or the mutual fund.

Rick Ferri
Rick, any thoughts on what the barrier is to broad adoption of ETFs in 401Ks as of 2020? Is it just fractional share trading of ETFs or is there a regulatory hurdle? Is the barrier that higher cost mutual funds including product placement fees offset plan administration costs?
FWIW, I can use a brokerage window and buy ETFs in my 401k today... but my 401k has better (lower cost) institutional index funds than any ETFs out there. I suspect some poorly ran 401k plans are getting side benefits to keep their employees in plans with only higher cost funds available.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Vanguard phasing out regular mutual fund shares?

Post by stan1 » Sun Dec 29, 2019 10:50 am

watchnerd wrote:
Sun Dec 29, 2019 10:46 am

By 2030, there will something new, probably AI-based.
Agree, an app store to buy proprietary trading algorithms for $9.99/month in accounts with direct holdings.

M1 is a lot of the way there already. I'm very surprised they don't have a storefront to buy pies yet since it is a way they could make money.

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Re: Vanguard phasing out regular mutual fund shares?

Post by cherijoh » Sun Dec 29, 2019 10:51 am

whodidntante wrote:
Sat Dec 28, 2019 7:14 pm
ETFs are structurally more efficient than mutual funds and reduce costs for Vanguard. As low cost zealots we should embrace ETFs and abandon mutual funds.
There are some circumstances where mutual funds are superior for an investor's needs. The one that springs to mind is anyone who is dollar cost averaging a fixed dollar amount either out of every paycheck (eg., into a tax-advantaged workplace plan) or semi-monthly or monthly from their checking account (into a taxable investment account).

Unless VG switches all the employer plans to unit investment trusts, I don't see them getting rid of traditional mutual fund shares.

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