Why I hate ETFs

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mrwalken
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Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 3:17 pm

I had the misfortune today of tax loss harvesting from an ETF to a mutual fund about an hour and a half before close. The market promptly shot up 3%, costing me about $1,000. I was harvesting $3,000 in losses, so the tax benefit will just about offset my loss from being out of the market for 1.5 hours.

I suppose this was mostly just bad luck.

More generally though, I absolutely hate the ETFs in my portfolio (VBR, VSS). I can't even remember why I bought these initially. I think corresponding mutual funds were not available for some reason. But now I have gains and I am stuck with them.

The stress and time wasted dealing with ETF trading has been massive for me. Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.

I rue the day I ever decided to add ETFs to my portfolio. Today was just another painful reminder.
Last edited by mrwalken on Tue Mar 10, 2020 3:42 pm, edited 1 time in total.

DaftInvestor
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Re: Why I hate ETFs

Post by DaftInvestor » Tue Mar 10, 2020 3:19 pm

Some folks feel the benefits of TLH aren't worth the hassle - maybe you are in this camp.

Topic Author
mrwalken
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Re: Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 3:23 pm

DaftInvestor wrote:
Tue Mar 10, 2020 3:19 pm
Some folks feel the benefits of TLH aren't worth the hassle - maybe you are in this camp.
TLH with mutual funds is a great benefit.

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simplesimon
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Re: Why I hate ETFs

Post by simplesimon » Tue Mar 10, 2020 3:23 pm

I've avoided ETFs to limit my ability to day trade.

Triple digit golfer
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Re: Why I hate ETFs

Post by Triple digit golfer » Tue Mar 10, 2020 3:27 pm

I also don't like ETFs. Seems so complex. I am a buy and hold investor. I like the simplicity of mutual funds, being able to invest set dollar amounts, and not having to worry about market orders, spread, all that stuff. I have $1,000 to invest, so I invest $1,000 in whatever the price is at close.

Tax-loss harvesting is easy too. Of course, you can get burned in that the market can shoot up at the end of the day, but that just means you have less of a deduction. You don't sell one low and buy one high.

In the grand scheme it won't be a big deal. Live and learn and use mutual funds only going forward if that is your preference.

Topic Author
mrwalken
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Re: Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 3:30 pm

Triple digit golfer wrote:
Tue Mar 10, 2020 3:27 pm
Tax-loss harvesting is easy too. Of course, you can get burned in that the market can shoot up at the end of the day, but that just means you have less of a deduction. You don't sell one low and buy one high.
That's exactly what I did due to trying to switch from an ETF to a mutual fund
Triple digit golfer wrote:
Tue Mar 10, 2020 3:27 pm
In the grand scheme it won't be a big deal. Live and learn and use mutual funds only going forward if that is your preference.
I'd have to pay taxes on $20K of gains to get completely out of ETFs. Honestly it might be worth taking the hit.

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iceport
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Re: Why I hate ETFs

Post by iceport » Tue Mar 10, 2020 3:34 pm

I hear you, mrwalken! And I agree with you wholeheartedly. The other major hassle is re-balancing with ETFs, compared to the simple, efficient, friction-less option of using good old mutual funds, which let you re-balance an entire portfolio across any number of custodians and accounts instantaneously!

No doubt there will be a parade of posts disagreeing with this perspective, extolling the "benefits" of ETFs. But to me, you might as well try to convince me carburetors and mechanical ignition timing beat electronic fuel injection and electronic ignition. :|

Just about the best reason I can see to use ETFs is to gain access to specific funds across various brokerage houses, where access to mutual funds is often severely limited. And if there are huge disparities in fees between ETF and traditional mutual fund options.

Folks that need to use ETFs for availability might convince themselves they ain't so bad, but I'd rather be adjusting the timing on my car than watching the market move around while I'm trying to execute a simple transaction.
Last edited by iceport on Tue Mar 10, 2020 3:36 pm, edited 1 time in total.
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Nicolas Perrault
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Re: Why I hate ETFs

Post by Nicolas Perrault » Tue Mar 10, 2020 3:35 pm

mrwalken wrote:
Tue Mar 10, 2020 3:17 pm
I had the misfortune today of tax loss harvesting from an ETF to a mutual fund about an hour and a half before close. The market promptly shot up 3%, costing me about $1,000. I was harvesting $3,000 in losses, so the tax benefit will just about offset my loss from being out of the market for 1.5 hours.

I suppose this was mostly just bad luck.

More generally though, I absolutely hate the ETFs in my portfolio (VBR, VSS). I can't even remember why I bought these initially. I think corresponding mutual funds were not available for some reason. But now I have gains and I am stuck with them.

The stress and time wasted dealing with mutual fund trading has been massive for me. Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.

I rue the day I ever decided to add ETFs to my portfolio. Today was just another painful reminder.
The title of your post claims that you will explain why you hate ETFs, but I don't understand why you do hate ETFs from this post. From what I understand, you dislike that you spent 1.5 hours out of the market when you switched money from ETFs to mutual funds. But if you had sold the ETFs to buy other ETFs instead, you would not have had this problem.

An ETF is just a wrapper. When you claim that you hate VBR and VSS, what you dislike is the content of the ETF (in this case, small-cap stocks), not the wrapper itself.

I don't do limit orders. I always trade liquid ETFs, make sure that I am buying or selling for a smaller number of shares than the number available, and then pass a market order. ETFs are great, especially if taxes are a concern.

mega317
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Re: Why I hate ETFs

Post by mega317 » Tue Mar 10, 2020 3:40 pm

mrwalken wrote:
Tue Mar 10, 2020 3:17 pm
But now I have gains and I am stuck with them.
You can donate them if you're planning on making a donation anyway.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

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Portfolio7
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Re: Why I hate ETFs

Post by Portfolio7 » Tue Mar 10, 2020 3:43 pm

I admit to enjoying the immediacy of ETFs, on the rare occasion I place buy or sell orders. That may be a function of the fact that my ETFs are in my IRAs, my 401Ks are populated with Mutual Funds. My 401Ks take at least two days to process: it's a pita waiting on it, and the scope for price changes much greater than a typical trade. But then, I don't TLH since all my savings are behind the tax wall (not by design, but by the time I considered any alternatives I was already here.)

However, I too am annoyed by the details of ETF trading, and the times I feel I got taken on price. I express that on the few occasions I have no worries about the timing of a transaction. I'll place limit trades outside the spread if momentum seems stalled. If nothing happens, fine, but if there is a dip or surge and someone will take my offer on the buy/sell, well, I feel like I managed to even the scales a bit. Don't tell me if I'm being stupid, the monetary impact is tiny, and it would ruin my sense of satisfaction...
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firebirdparts
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Re: Why I hate ETFs

Post by firebirdparts » Tue Mar 10, 2020 3:44 pm

DaftInvestor wrote:
Tue Mar 10, 2020 3:19 pm
Some folks feel the benefits of TLH aren't worth the hassle - maybe you are in this camp.
I laughed out loud.
A fool and your money are soon partners

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mrwalken
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Re: Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 3:44 pm

Nicolas Perrault wrote:
Tue Mar 10, 2020 3:35 pm

The title of your post claims that you will explain why you hate ETFs, but I don't understand why you do hate ETFs from this post. From what I understand, you dislike that you spent 1.5 hours out of the market when you switched money from ETFs to mutual funds. But if you had sold the ETFs to buy other ETFs instead, you would not have had this problem.

An ETF is just a wrapper. When you claim that you hate VBR and VSS, what you dislike is the content of the ETF (in this case, small-cap stocks), not the wrapper itself.

I don't do limit orders. I always trade liquid ETFs, make sure that I am buying or selling for a smaller number of shares than the number available, and then pass a market order. ETFs are great, especially if taxes are a concern.
Fixed a typo in my initial message:

The stress and time wasted dealing with ETF trading has been massive for me. Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.

It seems that I lose a few hours during the work day any time I ever want to make any transaction involving an ETF. I don't have that problem with mutual funds.

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hagridshut
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Re: Why I hate ETFs

Post by hagridshut » Tue Mar 10, 2020 3:49 pm

I have been interested in ETFs for several years, due to the low ERs relative to comparable Mutual Funds, lack of minimum initial investment amounts, and ability to be moved from brokerage to brokerage.

However, I decided in the end that ETFs just weren't worth the hassle. Commissions were an annoyance, although less so today since many brokerages have gone commission-free. Bid/Ask spreads were another annoyance. Not being able to set up automatic contributions and withdrawals is yet another downside.

In the end, ETFs just don't offer any clear overall advantage to me over Mutual Funds.
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FIREchief
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Re: Why I hate ETFs

Post by FIREchief » Tue Mar 10, 2020 3:53 pm

This is funny. I kind of feel the same way, but I think that's my right brain talking. My logical side is fine with either ETFs or Mutual funds. I'm buy and hold, so transactions are minimal. It would be easier to leave guidance for my heirs if everything were mutual funds. I may get back there eventually, but currently have a chunk of heavily appreciated VTI. Great fund!! Not so happy it's an ETF. As others suggested, donating appreciated ETFs to a DAF (or any charity) is a good way to utilize them. I think you get the average of the day's high/low (or something similar) as the basis for your donation value.
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FoolMeOnce
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Re: Why I hate ETFs

Post by FoolMeOnce » Tue Mar 10, 2020 4:00 pm

I get it, but also just TLH from one ETF to another, or wait until right before close, to avoid the 1.5 hour today you exposed yourself to today.

dkturner
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Re: Why I hate ETFs

Post by dkturner » Tue Mar 10, 2020 4:03 pm

mrwalken wrote:
Tue Mar 10, 2020 3:44 pm
Nicolas Perrault wrote:
Tue Mar 10, 2020 3:35 pm

The title of your post claims that you will explain why you hate ETFs, but I don't understand why you do hate ETFs from this post. From what I understand, you dislike that you spent 1.5 hours out of the market when you switched money from ETFs to mutual funds. But if you had sold the ETFs to buy other ETFs instead, you would not have had this problem.

An ETF is just a wrapper. When you claim that you hate VBR and VSS, what you dislike is the content of the ETF (in this case, small-cap stocks), not the wrapper itself.

I don't do limit orders. I always trade liquid ETFs, make sure that I am buying or selling for a smaller number of shares than the number available, and then pass a market order. ETFs are great, especially if taxes are a concern.
Fixed a typo in my initial message:

The stress and time wasted dealing with ETF trading has been massive for me. Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.

It seems that I lose a few hours during the work day any time I ever want to make any transaction involving an ETF. I don't have that problem with mutual funds.
You have discovered that ETFs are much more flexible than open ended mutual funds. Flexibility can be a liability for some people, who are best served by being offered more limited choices.

Today’s trend in investing is exactly the opposite of what you seem to be wishing for. More and more investors are attracted to ETFs for their portability and increasingly lower operating costs, in addition to the ability to purchase or sell them throughout the day.

If you are bothered by ETFs because they have intra-day liquidity (a big problem for some of the posters around here) why not simply pull your ETF buy or sell trigger a few minutes before the end of the day? By doing so you will have essentially gained the end of day pricing of open ended mutual funds, without giving up portability and lower operating costs. Seems like a simple fix to me.

ClassySDLivin
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Re: Why I hate ETFs

Post by ClassySDLivin » Tue Mar 10, 2020 4:03 pm

I read the title but conclude that your example transaction is a reason to hate mutual funds or TLH. Far be it from me to argue your opinion is wrong or unfounded, but consider that if you had TLH from an ETF to another ETF you would avoid the issue that you experienced (and is hard to avoid doing what you did in this volatility). Even doing a mutual fund to mutual fund TLH could cause similar issues unless you could trade on margin while you waited for the first fund to sell (and maybe settle). Sorry to hear of your lost (TL) losses - one suggestion is trade ETF for ETF and plan for all trades in advance (so that the $$ are only out of the market for seconds assuming the brokerage you use allows for trading on unsettled funds).

marathonfi
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Re: Why I hate ETFs

Post by marathonfi » Tue Mar 10, 2020 4:07 pm

I feel your pain. I bought $11,000 in VFIAX at noon today (+0.2%) but ended up with less shares because of the run up towards close. Definitely hurts a little to have $500 evaporated just like that.

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iceport
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Re: Why I hate ETFs

Post by iceport » Tue Mar 10, 2020 4:09 pm

ClassySDLivin wrote:
Tue Mar 10, 2020 4:03 pm
Even doing a mutual fund to mutual fund TLH could cause similar issues unless you could trade on margin while you waited for the first fund to sell (and maybe settle).
Mutual funds let you exchange one for another in one simple, instantaneous transaction that executes at the close of business. Light years beyond the clunky old process of trading ETFs.
"Discipline matters more than allocation.” ─William Bernstein

deltaneutral83
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Re: Why I hate ETFs

Post by deltaneutral83 » Tue Mar 10, 2020 4:16 pm

OP, the thing to have done is to execute an order at 3:59 at the market or enter the limit one cent above the ask. It's a small price to pay as you can now see. Minimal movements that goes for both directions, had this been done yesterday, you'd be the hero at 2:30 pm on an ETF and a 4pm close on mutual funds. The ETF to MF "conversion" is best done by doing the ETF order a minute or two before the close.

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Re: Why I hate ETFs

Post by KingRiggs » Tue Mar 10, 2020 4:17 pm

ClassySDLivin wrote:
Tue Mar 10, 2020 4:03 pm
I read the title but conclude that your example transaction is a reason to hate mutual funds or TLH. Far be it from me to argue your opinion is wrong or unfounded, but consider that if you had TLH from an ETF to another ETF you would avoid the issue that you experienced (and is hard to avoid doing what you did in this volatility). Even doing a mutual fund to mutual fund TLH could cause similar issues unless you could trade on margin while you waited for the first fund to sell (and maybe settle). Sorry to hear of your lost (TL) losses - one suggestion is trade ETF for ETF and plan for all trades in advance (so that the $$ are only out of the market for seconds assuming the brokerage you use allows for trading on unsettled funds).
Totally agree. Your issue was because you sold the ETF and got whip-sawed by 90 minutes of market activity. If you had sold and ETF and immediately bought a replacement ETF, you’d have had immediate, efficient results. No need to mess with limit orders, etc in a well-traded ETF. I placed market orders to sell VEU, it executed immediately. Then bought VXUS a minute later with a market order. Easy peasy.
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jjface
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Re: Why I hate ETFs

Post by jjface » Tue Mar 10, 2020 4:19 pm

Sounds like the issue was swapping from a etf to a mutual fund more than anything and you did your etf order too soon. Should have placed it nearer to the close.

I do prefer the simplicity of mutual funds though. Less chance of making a mistake. But mustakes are usually things that could have been avoided rather than a problem with what you are buying and selling.
Last edited by jjface on Tue Mar 10, 2020 4:22 pm, edited 1 time in total.

MotoTrojan
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Re: Why I hate ETFs

Post by MotoTrojan » Tue Mar 10, 2020 4:20 pm

Why 1.5 hours when you could’ve been out for 5 minutes?

wxl31
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Re: Why I hate ETFs

Post by wxl31 » Tue Mar 10, 2020 4:27 pm

Funny you should bring this up. Right now, I hate mutual funds, but really, it's the transition between the two that is the source of the pain.

My example: sold a mutual fund yesterday to tax loss harvest. Because the transaction processes at the end of the trading day, was unable to deploy that money to immediately buy ETFs. This morning, market had gone up 4-5% before I could enter a buy order for a similar ETF.

Currently switching from mutual funds to ETFs because I like the portability and lower expense ratios. But realizing that it can be a pain to do so.

My advice: figure out early on whether you prefer ETFs or mutual funds and stick to it.

Ferdinand2014
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Re: Why I hate ETFs

Post by Ferdinand2014 » Tue Mar 10, 2020 4:27 pm

mrwalken wrote:
Tue Mar 10, 2020 3:17 pm
I had the misfortune today of tax loss harvesting from an ETF to a mutual fund about an hour and a half before close. The market promptly shot up 3%, costing me about $1,000. I was harvesting $3,000 in losses, so the tax benefit will just about offset my loss from being out of the market for 1.5 hours.

I suppose this was mostly just bad luck.

More generally though, I absolutely hate the ETFs in my portfolio (VBR, VSS). I can't even remember why I bought these initially. I think corresponding mutual funds were not available for some reason. But now I have gains and I am stuck with them.

The stress and time wasted dealing with ETF trading has been massive for me. Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.

I rue the day I ever decided to add ETFs to my portfolio. Today was just another painful reminder.
Yep. I would never consider owning ETF's. I only own super low cost index mutual funds and have been very, very happy. Besides the reasons you describe, mutual funds avoid many potential behavioral mistakes, allow me to automatically invest (also avoiding behavioral mistakes) and allow exact dollar investments.
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vineviz
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Re: Why I hate ETFs

Post by vineviz » Tue Mar 10, 2020 4:33 pm

mrwalken wrote:
Tue Mar 10, 2020 3:44 pm
Fiddling with market orders, worrying about the spread, limit orders that partially fill, limit orders that need to be reset a few times to fill, etc.
Market orders don't require any "fiddling", certainly no more than the equivalent order in a mutual fund.

And with liquid ETFs of the type mentioned in the OP (e.g. VTI, VBR, VSS) there's no reason to spend anytime "worrying" about spreads except to set our limit order prices (if you choose to use limit orders) outside of whatever the prevailing spread is when you go online. That will ensure you rarely, if ever, suffer a partial fill or cancelled limit order ever again.
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MittensMoney
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Re: Why I hate ETFs

Post by MittensMoney » Tue Mar 10, 2020 4:35 pm

If you had bought an ETF rather than a Mutual Fund you wouldn't have had this problem, so can't we just as easily say the problem is on the side of the Mutual Fund?

JonnyB
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Re: Why I hate ETFs

Post by JonnyB » Tue Mar 10, 2020 4:38 pm

dkturner wrote:
Tue Mar 10, 2020 4:03 pm
Today’s trend in investing is exactly the opposite of what you seem to be wishing for. More and more investors are attracted to ETFs for their portability and increasingly lower operating costs, in addition to the ability to purchase or sell them throughout the day.
"Today's trends in investing" seems a pretty weak argument. "Financial innovation" hasn't exactly been the boon that people make it out to be. It has mainly been gimmicks for transferring customers' money to the hands of financiers.

Mutual funds from Fidelity, Schwab and Vanguard are portable. They have low expense ratios. As for ability to purchase or sell throughout the day, they would seem to only be of interest to high frequency traders, not investors.

Retired1809
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Re: Why I hate ETFs

Post by Retired1809 » Tue Mar 10, 2020 4:43 pm

The volatility of the last few weeks could make anybody hate just about any ETF and fall back in love with guaranteed CDs from banks and credit unions! If you've achieved critical mass, you've earned the luxury not to have to deal with these matters.

bgf
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Re: Why I hate ETFs

Post by bgf » Tue Mar 10, 2020 4:45 pm

this is definitely a "you" problem. you wouldnt have had an issue if you just bought into another ETF or if you waited til the end of the day to sell the ETF and buy the mutual fund.

the illiquidity is the fault of the mutual fund. not the ETF.

i TLH from my taxable account today to make all my Roth contributions for 2020. funds didnt settle for transfer by the end of the day.

oh well, big deal.
Last edited by bgf on Tue Mar 10, 2020 4:47 pm, edited 1 time in total.
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RetiredAL
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Re: Why I hate ETFs

Post by RetiredAL » Tue Mar 10, 2020 4:46 pm

KingRiggs wrote:
Tue Mar 10, 2020 4:17 pm
ClassySDLivin wrote:
Tue Mar 10, 2020 4:03 pm
I read the title but conclude that your example transaction is a reason to hate mutual funds or TLH. Far be it from me to argue your opinion is wrong or unfounded, but consider that if you had TLH from an ETF to another ETF you would avoid the issue that you experienced (and is hard to avoid doing what you did in this volatility). Even doing a mutual fund to mutual fund TLH could cause similar issues unless you could trade on margin while you waited for the first fund to sell (and maybe settle). Sorry to hear of your lost (TL) losses - one suggestion is trade ETF for ETF and plan for all trades in advance (so that the $$ are only out of the market for seconds assuming the brokerage you use allows for trading on unsettled funds).
Totally agree. Your issue was because you sold the ETF and got whip-sawed by 90 minutes of market activity. If you had sold and ETF and immediately bought a replacement ETF, you’d have had immediate, efficient results. No need to mess with limit orders, etc in a well-traded ETF. I placed market orders to sell VEU, it executed immediately. Then bought VXUS a minute later with a market order. Easy peasy.
+1 each to Classy and King.

I've never had a market ETF transaction that was NOT the very close to price (by more than a penny or two off) to what I thought I was getting. Then again, the ETF's I've deal with are widely transacted and I only trade during market open hrs.
Last edited by RetiredAL on Tue Mar 10, 2020 5:32 pm, edited 1 time in total.

rapscallion
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Re: Why I hate ETFs

Post by rapscallion » Tue Mar 10, 2020 5:08 pm

ETF novice here. If I sell an ETF, is that money available right away to buy something else? I’m under the impression there’s a settling period where the money is unavailable.

DB2
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Re: Why I hate ETFs

Post by DB2 » Tue Mar 10, 2020 5:12 pm

I cannot help but wonder if ETFs are contributing to more volatility in the market. If these were mutual fund based instead but with a 30-day waiting period before getting back in after selling shares (as Vanguard does) I bet there would be more stability.

RetiredAL
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Re: Why I hate ETFs

Post by RetiredAL » Tue Mar 10, 2020 5:22 pm

Duplicate
Last edited by RetiredAL on Tue Mar 10, 2020 5:32 pm, edited 1 time in total.

Ping Pong
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Re: Why I hate ETFs

Post by Ping Pong » Tue Mar 10, 2020 5:30 pm

Had you tried to rebalance with mutual funds based on the intraday price, you would have also lost $1000. Now you should hate traditional mutual funds.

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Nate79
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Re: Why I hate ETFs

Post by Nate79 » Tue Mar 10, 2020 5:31 pm

Sadly even on Bogleheads there is a lot of ignorance towards ETFs which leads to gravitating towards antiquated primitive mutual funds. To each their own.

lostdog
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Re: Why I hate ETFs

Post by lostdog » Tue Mar 10, 2020 5:32 pm

marathonfi wrote:
Tue Mar 10, 2020 4:07 pm
I feel your pain. I bought $11,000 in VFIAX at noon today (+0.2%) but ended up with less shares because of the run up towards close. Definitely hurts a little to have $500 evaporated just like that.
You mean VOO?
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Retired1809
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Re: Why I hate ETFs

Post by Retired1809 » Tue Mar 10, 2020 5:36 pm

The volatility of the last few weeks could make anybody hate just about any ETF and fall back in love with guaranteed CDs from banks and credit unions! If you've achieved critical mass, you've earned the luxury not to have to deal with these matters.

TropikThunder
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Re: Why I hate ETFs

Post by TropikThunder » Tue Mar 10, 2020 5:44 pm

rapscallion wrote:
Tue Mar 10, 2020 5:08 pm
ETF novice here. If I sell an ETF, is that money available right away to buy something else? I’m under the impression there’s a settling period where the money is unavailable.
You can use the proceeds immediately to purchase another fund, but you can’t remove the cash from the account until it settles.

ninjab
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Re: Why I hate ETFs

Post by ninjab » Tue Mar 10, 2020 6:26 pm

I TLH'd today and the market moved quite a bit higher in the couple minutes it took me to rebuy, lost $1000 in the transaction that was ETF to ETF(maybe some of that loss was because of the spread). Did harvest over 10k in losses, so probably worth it, but quite annoying.

Mutual funds would of been really annoying to tax loss harvest, would of had much less losses to harvest at close. In taxable I certainly think ETFs are the better vehicle.

Northern Flicker
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Re: Why I hate ETFs

Post by Northern Flicker » Tue Mar 10, 2020 6:33 pm

Mutual fund investors should love ETFs because they provide a vehicle for day traders, market timers, and other active traders to use, keeping them out of the mutual fund shares.
Risk is not a guarantor of return.

columbia
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Re: Why I hate ETFs

Post by columbia » Tue Mar 10, 2020 6:35 pm

simplesimon wrote:
Tue Mar 10, 2020 3:23 pm
I've avoided ETFs to limit my ability to day trade.
+1
If you leave your head in the sand for too long, you might get run over by a Jeep.

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mrwalken
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Re: Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 6:36 pm

One point I will add here is that I have been reluctant to place ETF market orders at times of high volitility, including near the open or close. I seem to recall reading on here about people getting screwed with market orders but that may just be my own ignorance.

Anyways the TLH aspect is not that important. Lots of smart people here advise just selling, waiting a month, and rebuying. No particular reason to think the market is more likely to go up or down in that period (let alone 1.5 hours).

My main issue with ETFs is navigating intra-day trading, regardless of the purpose.

123
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Re: Why I hate ETFs

Post by 123 » Tue Mar 10, 2020 6:43 pm

Mutual funds have their advantages - with end=of-session pricing you may not know till much later whether you had a gain or a loss on a sale.
The closest helping hand is at the end of your own arm.

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mrwalken
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Re: Why I hate ETFs

Post by mrwalken » Tue Mar 10, 2020 6:45 pm

On a related point, is there a mutual fund equivalent of VSS that I can TLH to? (VFSVX won't work). As the market looks now, I should be able to fully close out of VSS tomorrow without any gains despite having shares from like 2012.

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oneleaf
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Re: Why I hate ETFs

Post by oneleaf » Tue Mar 10, 2020 6:52 pm

mrwalken wrote:
Tue Mar 10, 2020 6:45 pm
On a related point, is there a mutual fund equivalent of VSS that I can TLH to? (VFSVX won't work). As the market looks now, I should be able to fully close out of VSS tomorrow without any gains despite having shares from like 2012.
VFSAX, the admiral share version is still open.

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Forester
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Re: Why I hate ETFs

Post by Forester » Tue Mar 10, 2020 6:57 pm

Bogle was right, ETFs are too easy to trade. What can you do, some people benefit from the flexibility, others trade their account away.

fwellimort
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Re: Why I hate ETFs

Post by fwellimort » Tue Mar 10, 2020 7:06 pm

I think this has more to do with misusing ETFs than the ETFs themselves.

ETFs on paper are far superior to mutual funds.

It does everything a mutual fund can do with ability to buy/sell instantly.

Also, there's just a lot more options for tax loss harvesting with ETFs.

Total markets alone has: ITOT VTI SPTM SCHB
Then there's the similar ones such as large cap blend, etc. (such as S&P500) with each category having 4 or more low expense alternatives.

I don't want to be rude but I believe it was your fault changing an ETF to mutual fund with over an hour and half trading time.
If you go the ETF route, stick to ETFs. Likewise, if you go to mutual fund route, stick to mutual funds. Moving around both classes can be headaches in itself.

That said, if you own ETFs and want it to behave like mutual funds, just transfer the funds to m1finance. They make ETFs work like mutual funds.
iceport wrote:
Tue Mar 10, 2020 3:34 pm
I hear you, mrwalken! And I agree with you wholeheartedly. The other major hassle is re-balancing with ETFs, compared to the simple, efficient, friction-less option of using good old mutual funds, which let you re-balance an entire portfolio across any number of custodians and accounts instantaneously!
No doubt there will be a parade of posts disagreeing with this perspective, extolling the "benefits" of ETFs. But to me, you might as well try to convince me carburetors and mechanical ignition timing beat electronic fuel injection and electronic ignition. :|
This issue is solved if you move your ETFs to a brokerage like m1finance.
I would argue re-balancing is even easier in m1finance than traditional mutual fund brokerages such as Vanguard/Schwab/Fidelity.
Mostly because m1finance makes ETFs have the same behavior as mutual funds.
Of course, it also means going forward, for those who prefer mutual funds, to purchase mutual funds instead in another brokerage but for people like OP that still have some ETFs (and are frustrated), it makes sense for OP to just transfer those ETFs to m1finance.
Or.. OP could just move to a brokerage that allows partial shares like Fidelity and buy/sell ETFs in dollar amounts. Makes life a whole lot easier and unlike m1finance, you can trade whenever (so you can trade when you believe you should tax loss harvest instead of a day later or end of day).
Last edited by fwellimort on Tue Mar 10, 2020 7:21 pm, edited 2 times in total.

mega317
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Re: Why I hate ETFs

Post by mega317 » Tue Mar 10, 2020 7:18 pm

ninjab wrote:
Tue Mar 10, 2020 6:26 pm
I TLH'd today and the market moved quite a bit higher in the couple minutes it took me to rebuy, lost $1000 in the transaction that was ETF to ETF(maybe some of that loss was because of the spread). Did harvest over 10k in losses, so probably worth it, but quite annoying.

Mutual funds would of been really annoying to tax loss harvest, would of had much less losses to harvest at close. In taxable I certainly think ETFs are the better vehicle.
This post is incredible. Lost a thousand dollars with ETFs, but mutual funds are annoying and the conclusion is ETFs are certainly better.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

justsomeguy2018
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Re: Why I hate ETFs

Post by justsomeguy2018 » Tue Mar 10, 2020 7:29 pm

Aren't ETFs more tax efficient than mutual funds? Is the advantage neglible? Can someone quantify it for me?

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