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Rebalancing with Mutual Funds

Posted: Wed Mar 25, 2020 6:18 pm
by unclescrooge
Given the recent volatility around Municipal bond ETFs, I was wondering about moving to a Munie Mutual Fund.

I currently have ETFs in my taxable account at TD Ameritrade so rebalancing is very straightforward. However, I was wondering if I had a mix of ETFs and Mutual Funds, how would i execute a rebalance?

Mutual funds don't sell in real time. The orders are executed after hours. If the market moves against you between when you place the trade and market close, wouldn't that mess up how much you're buying and selling?

How do most of you rebalance?

Re: Rebalancing with Mutual Funds

Posted: Wed Mar 25, 2020 6:24 pm
by Jack FFR1846
You're in a bind. My largest account is an IRA at Fidelity holding Fidelity mutual funds, so I simply do a "sell dollars and use the proceeds to buy another", filling the from, to and amount. Bam...done. Just did it this morning.

Re: Rebalancing with Mutual Funds

Posted: Wed Mar 25, 2020 7:59 pm
by rkhusky
unclescrooge wrote:
Wed Mar 25, 2020 6:18 pm
How do most of you rebalance?
Wait until about 3:50 to put in my order.

Re: Rebalancing with Mutual Funds

Posted: Wed Mar 25, 2020 9:07 pm
by unclescrooge
Jack FFR1846 wrote:
Wed Mar 25, 2020 6:24 pm
You're in a bind. My largest account is an IRA at Fidelity holding Fidelity mutual funds, so I simply do a "sell dollars and use the proceeds to buy another", filling the from, to and amount. Bam...done. Just did it this morning.
Can you buy and sell the same day?

Re: Rebalancing with Mutual Funds

Posted: Thu Mar 26, 2020 1:38 am
by BroIceCream
unclescrooge wrote:
Wed Mar 25, 2020 9:07 pm
Jack FFR1846 wrote:
Wed Mar 25, 2020 6:24 pm
You're in a bind. My largest account is an IRA at Fidelity holding Fidelity mutual funds, so I simply do a "sell dollars and use the proceeds to buy another", filling the from, to and amount. Bam...done. Just did it this morning.
Can you buy and sell the same day?
Yes, that is how the transaction is created. You can select to "sell dollars and use the proceeds to buy another", and specify the new fund you want the resulting dollars to go into. They will get processed after the market closes. I like it because it removes the temptation to "time the market" or time of day. They trade after the fund price settles to the NAV. It doesn't matter when I initiate the order.

Re: Rebalancing with Mutual Funds

Posted: Thu Mar 26, 2020 3:21 am
by birdog
Jack FFR1846 wrote:
Wed Mar 25, 2020 6:24 pm
You're in a bind. My largest account is an IRA at Fidelity holding Fidelity mutual funds, so I simply do a "sell dollars and use the proceeds to buy another", filling the from, to and amount. Bam...done. Just did it this morning.
That is definitely an advantage for mutual funds. I also have ETFs at TD Ameritrade and plan to stay with them, however. Since I’m still accumulating I don’t rebalance much since I can just use new dollars to purchase the ETF (stock or bond) that I need to get me closer to my desired AA. But since I stick with ETFs only, if I need to exchange funds I just sell one and buy the other in about two minutes at the most. The recent volatility and liquidity issues has maybe exposed ETFs a bit compared to mutual funds but I’ve read where one poster on here (who used to work in the mutual fund market) says the ETFs pricing was more accurate. Anyway, I plan to stick with ETFs. I like that I can hold them at any brokerage.

To exchange an ETF for a MF, I’d just sell the ETF at 3:55 and then input the MF buy order. There could be a small swing in price but it’s not like you’d be doing this very often.

Re: Rebalancing with Mutual Funds

Posted: Thu Mar 26, 2020 4:29 am
by avenger
I have a rebalancing spreadsheet that allows me to factor in the current fund price.

I input those data 10 minutes before market close and then transact.

But I’ve only rebalanced once in my 9 year investing career (last week).