Logistics of Fractional ETF Shares at Fidelity

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NYCaviator
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Logistics of Fractional ETF Shares at Fidelity

Post by NYCaviator »

Now that M1, Fidelity and others have been offering fractional ETF shares for a bit of time, has anyone found any pitfalls with cost-basis, transferring shares to another brokerage, etc.? I read on an older post that the fractional shares are actually a tiny bit pricier than the full shares, and that there could be some issues transferring them out to another brokerage. Curious if anyone has experienced any of that.

Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
livesoft
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by livesoft »

Let me piggyback on your post and ask the question a different way:

Is fractional ETF share accounting anywhere (especially Fidelity) just like fractional mutual fund share accounting when it comes to specific identification, tax-loss harvesting, realized gains and losses? An example of spec ID of fractional mutual fund accounting at Vanguard is demonstrated in this old screen capture:

Image
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by livesoft »

It seems like someone would do some experiments to figure this all out and not take the word of Fidelity on what happens. :twisted:
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by NYCaviator »

That's a great question too. On Fidelity's site it says "Fractional share positions will need to be liquidated prior to transferring out." Does this mean each individual lot will have fractional shares? So if I invest a set amount every two weeks, does that mean when I go to sell or transfer out, I am going to have 26 different fractional shares that will have to be liquidated? Or do the fractional shares get added onto other fractional shares to make a whole?
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by muffins14 »

Speaking from my fidelity experience, I believe that in a taxable account, everything is linked to the transaction time and thus the basis. If you tried to get $100 of an ETF in one order and that meant 5.4 shares, you would likely have an order execute for 5 shares and another for 0.4 shares. Then in the future you’d need to sell that 0.4 shares. You can’t really “combine it” with some other fractional amount of 0.6 shares because the cost bases are different, but I’m sure if you did a “sell all shares” transaction type then you would liquidate both at their respective cost bases.

In other words you should probably indeed have 26 fractional amounts, but you can probably transfer the whole-number share amounts first, then come back post-transfer and liquidate the fractional shares (I would hope)
Last edited by muffins14 on Tue Nov 09, 2021 8:30 am, edited 1 time in total.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by indexfundfan »

I don't deal with fractional shares at Fidelity in the taxable account now. But I just wanted to relate what happened to the fractional shares when they were transferred several years ago, to Merrill Edge if I remember correctly.

I will illustrate with an example. Suppose there were 3 lots

Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 10.2 shares

Total number of shares = 31.5

# shares transferred = 31. The 0.5 fractional share was liquidated at source. If I recall correctly, it was assumed to be sold from Lot A (oldest lot).

Now the 31 shares arrived at the new broker. The new broker probably also received the following cost basis information

Lot A : 10.1 shares (remember 0.5 share was sold)
Lot B : 10.7 shares
Lot C : 10.2 shares

The new broker created the following lots

Lot A: 10 shares
Lot B: 10 shares
Lot C: 10 shares
Lot D: 1 share

Lot D was created from the sum of all the fractional shares with the sum of their corresponding cost basis. However, I don't recall what was the assigned acquisition date since this happened quite some time back and they were all already LTCG (I had since sold the shares).

Of course different brokers could possibly handle them differently. But this gives you an idea what could happen.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by lazynovice »

Regarding the share price being higher for the fractional share, there was a thread thus summer where several of us posted our experience that week. We all paid the same price for the fractional share as the whole share. This was for very liquid ETFs such as VTI, ITOT, VEU, etc.

I have not tried to move my fractional shares to another brokerage. I did move VTI from Vanguard to Fidelity after converting from VTSAX. Vanguard sold down to a whole number of shares out of one lot and transferred all other lots over identically.

ETA: I have sold fractional shares and they don’t create any issues with cost basis. I click sell, select specific shares and select the lots I want to sell. I pick the ones with losses first whether they be whole or fractional shares. No different than with whole shares.

So far, I have found no pitfalls with fractional share trading.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by lazynovice »

livesoft wrote: Tue Nov 09, 2021 7:38 am Let me piggyback on your post and ask the question a different way:

Is fractional ETF share accounting anywhere (especially Fidelity) just like fractional mutual fund share accounting when it comes to specific identification, tax-loss harvesting, realized gains and losses? An example of spec ID of fractional mutual fund accounting at Vanguard is demonstrated in this old screen capture:

Image
Yes. Except the fractional share appears as a separate lot with its own cost basis- which in my experience has been the same price as the other lot. Because my memory could be slightly off and I need some wiggle room, maybe they are half a penny more expensive on a 200 share price.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by anon_investor »

indexfundfan wrote: Tue Nov 09, 2021 8:30 am I don't deal with fractional shares at Fidelity in the taxable account now. But I just wanted to relate what happened to the fractional shares when they were transferred several years ago, to Merrill Edge if I remember correctly.

I will illustrate with an example. Suppose there were 3 lots

Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 10.2 shares

Total number of shares = 31.5

# shares transferred = 31. The 0.5 fractional share was liquidated at source. If I recall correctly, it was assumed to be sold from Lot A (oldest lot).

Now the 31 shares arrived at the new broker. The new broker probably also received the following cost basis information

Lot A : 10.1 shares (remember 0.5 share was sold)
Lot B : 10.7 shares
Lot C : 10.2 shares

The new broker created the following lots

Lot A: 10 shares
Lot B: 10 shares
Lot C: 10 shares
Lot D: 1 share

Lot D was created from the sum of all the fractional shares with the sum of their corresponding cost basis. However, I don't recall what was the assigned acquisition date since this happened quite some time back and they were all already LTCG (I had since sold the shares).

Of course different brokers could possibly handle them differently. But this gives you an idea what could happen.
Interesting. I converted a mutual fund to ETF at Vanguard then transfered the ETFs to Merrill Edge. I had SpecID on, but ALL of the lots were fractional shares. What happened was slightly different. I didn't want to liquidate the fractional share, so I left a couple of shares at Vanguard and transfered via ACATS a whole number of shares to Merrill Edge. So lets us the above numbers, this is what happened:

Lets say at Vanguard I had 31.5 shares:
Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 10.2 shares

Lets say I transfered 30 to Merrill Edge, leaving the 1.5 at Vanguard, this is what the transation looked like at Merrill Edge after the cost basis transfered (to be clear, Merrill Edge is showing fractional tax lots, when if I try to sell, it does let me select up to 4 tax lots and combine them to get to whole shares, so I will have the correct cost basis upon sale):
Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 8.7 shares

(And Lot C: 1.5 remained at Vanguard)

So Vanguard transfered FIFO and combined fractional share lots to get to 30 shares transfered to Merrill Edge.

I wonder if Fidelity is not like this too.

I have only recently started purchasing fractional ETF shares of VTI at Fidelity. I have been making market orders by dollar amount. The whole shares seem to be purchased first then the remaining fractional share. There is no consistency as to which gets the better price, sometimes the fractional share gets it, sometimes it doesn't. Since they are market orders, I assume the regular price fluctuations of the ETF determines what the purchase price is, not getting "worse" pricing on the fractional shares. When I look at my Fidelity tax losts, the fractional shares appear as separate transactions from the whole shares ordered at the same time (the price difference was about 1-2 cents per share). I wonder if I tried to transfer my VTI to another brokerage, if they would just combined the fractional share tax lots to make a whole share as Vanguard does (I hope this is the case).
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by indexfundfan »

anon_investor wrote: Tue Nov 09, 2021 8:52 am Interesting. I converted a mutual fund to ETF at Vanguard then transfered the ETFs to Merrill Edge. I had SpecID on, but ALL of the lots were fractional shares. What happened was slightly different. I didn't want to liquidate the fractional share, so I left a couple of shares at Vanguard and transfered via ACATS a whole number of shares to Merrill Edge. So lets us the above numbers, this is what happened:

Lets say at Vanguard I had 31.5 shares:
Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 10.2 shares

Lets say I transfered 30 to Merrill Edge, leaving the 1.5 at Vanguard, this is what the transation looked like at Merrill Edge after the cost basis transfered (to be clear, Merrill Edge is showing fractional tax lots, when if I try to sell, it does let me select up to 4 tax lots and combine them to get to whole shares, so I will have the correct cost basis upon sale):
Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 8.7 shares

(And Lot C: 1.5 remained at Vanguard)

So Vanguard transfered FIFO and combined fractional share lots to get to 30 shares transfered to Merrill Edge.

I wonder if Fidelity is not like this too.

I have only recently started purchasing fractional ETF shares of VTI at Fidelity. I have been making market orders by dollar amount. The whole shares seem to be purchased first then the remaining fractional share. There is no consistency as to which gets the better price, sometimes the fractional share gets it, sometimes it doesn't. Since they are market orders, I assume the regular price fluctuations of the ETF determines what the purchase price is, not getting "worse" pricing on the fractional shares. When I look at my Fidelity tax losts, the fractional shares appear as separate transactions from the whole shares ordered at the same time (the price difference was about 1-2 cents per share). I wonder if I tried to transfer my VTI to another brokerage, if they would just combined the fractional share tax lots to make a whole share as Vanguard does (I hope this is the case).
I would take your experience as the more likely one. Mine was many years ago and probably outdated as brokerages update their software system.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by NYCaviator »

indexfundfan wrote: Tue Nov 09, 2021 8:30 am I don't deal with fractional shares at Fidelity in the taxable account now. But I just wanted to relate what happened to the fractional shares when they were transferred several years ago, to Merrill Edge if I remember correctly.

I will illustrate with an example. Suppose there were 3 lots

Lot A : 10.6 shares
Lot B : 10.7 shares
Lot C : 10.2 shares

Total number of shares = 31.5

# shares transferred = 31. The 0.5 fractional share was liquidated at source. If I recall correctly, it was assumed to be sold from Lot A (oldest lot).

Now the 31 shares arrived at the new broker. The new broker probably also received the following cost basis information

Lot A : 10.1 shares (remember 0.5 share was sold)
Lot B : 10.7 shares
Lot C : 10.2 shares

The new broker created the following lots

Lot A: 10 shares
Lot B: 10 shares
Lot C: 10 shares
Lot D: 1 share

Lot D was created from the sum of all the fractional shares with the sum of their corresponding cost basis. However, I don't recall what was the assigned acquisition date since this happened quite some time back and they were all already LTCG (I had since sold the shares).

Of course different brokers could possibly handle them differently. But this gives you an idea what could happen.
Thanks! This makes me feel better. So, at worst, there would be a liquidation of a fraction of one share, rather than a liquidation of every fractional share from every lot you bought over the years?
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by SnowBog »

NYCaviator wrote: Tue Nov 09, 2021 7:29 am Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
I think you are making this more complicated...

Ultimately, it boils down to what you transact.

In your example above, you have 201 shares made up of 2 lots. You could sell the 201 shares, and it wouldn't (anymore) have anything to do with fractional shares.

Likewise, you could sell 110 of your shares, again having nothing to do with fractional shares, which would sell off 1 lot and reduce the shares in the other.

Where fractional shares are relevant is when you are buying or selling fractional shares. If you place an order to sell the lot that contains 100.98 shares - the 0.98 shares will be transacted separately as a fractional trade (the 100 would sell ASAP, the fractional piece would process later in the day). Same as would happen if you decide to sell 0.5 shares, or sell $100 worth (the dollar amount would be converted to fractional shares).
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by NYCaviator »

SnowBog wrote: Tue Nov 09, 2021 1:45 pm
NYCaviator wrote: Tue Nov 09, 2021 7:29 am Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
I think you are making this more complicated...

Ultimately, it boils down to what you transact.

In your example above, you have 201 shares made up of 2 lots. You could sell the 201 shares, and it wouldn't (anymore) have anything to do with fractional shares.

Likewise, you could sell 110 of your shares, again having nothing to do with fractional shares, which would sell off 1 lot and reduce the shares in the other.

Where fractional shares are relevant is when you are buying or selling fractional shares. If you place an order to sell the lot that contains 100.98 shares - the 0.98 shares will be transacted separately as a fractional trade (the 100 would sell ASAP, the fractional piece would process later in the day). Same as would happen if you decide to sell 0.5 shares, or sell $100 worth (the dollar amount would be converted to fractional shares).
I think I'm getting it! My concern though is the transfer of shares to a new broker. I've read that if you have fractional shares it liquidates the fractional portion when transferring but the whole shares can transfer in kind as a whole ETF share. Is that for every single lot where a fractional share has been purchased? Because over the course of say 10 years, that is a LOT of lots with fractional shares. Or, does it just group them all lots together to add up to whole shares, such that you'd have .99 or less of a share that would actually be liquidated?
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by SnowBog »

Great question - unfortunately one I can't answer...

It might even differ based on who the originating and receiving brokerage firms are. So even if it works a certain way at brokerage A doesn't necessarily mean it works that way at brokerage B.

My working theory has been they'd just sell off whatever fractional balance I had, so my 100.98 shares would get sold down to 100 shares and that's what would get transferred. (Which shares were sold would depend on either what I selected, or what my defaults are set to like LILO or "tax-sensitive".)

But honestly, other than ESPP where I don't have a choice, I try to avoid fractional shares. I like to do things like set pre-defined trades for TLH - which only works with "full" shares (so any residual fractional shares have to be manually executed) and make occasional off-hours "limit" orders (which only work for "full" shares). So I tend to either "round up" (transfer in a few extra dollars if needed) or "round down" (and sweep any balance to a mutual fund or back to my savings account) to the next full share when I purchase.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by lazynovice »

NYCaviator wrote: Tue Nov 09, 2021 5:39 pm
SnowBog wrote: Tue Nov 09, 2021 1:45 pm
NYCaviator wrote: Tue Nov 09, 2021 7:29 am Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
I think you are making this more complicated...

Ultimately, it boils down to what you transact.

In your example above, you have 201 shares made up of 2 lots. You could sell the 201 shares, and it wouldn't (anymore) have anything to do with fractional shares.

Likewise, you could sell 110 of your shares, again having nothing to do with fractional shares, which would sell off 1 lot and reduce the shares in the other.

Where fractional shares are relevant is when you are buying or selling fractional shares. If you place an order to sell the lot that contains 100.98 shares - the 0.98 shares will be transacted separately as a fractional trade (the 100 would sell ASAP, the fractional piece would process later in the day). Same as would happen if you decide to sell 0.5 shares, or sell $100 worth (the dollar amount would be converted to fractional shares).
I think I'm getting it! My concern though is the transfer of shares to a new broker. I've read that if you have fractional shares it liquidates the fractional portion when transferring but the whole shares can transfer in kind as a whole ETF share. Is that for every single lot where a fractional share has been purchased? Because over the course of say 10 years, that is a LOT of lots with fractional shares. Or, does it just group them all lots together to add up to whole shares, such that you'd have .99 or less of a share that would actually be liquidated?
You’ll have to test it yourself or call Fidelity but based on transferring from Vanguard to Fidelity, it is the latter.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by nalor511 »

NYCaviator wrote: Tue Nov 09, 2021 5:39 pm
SnowBog wrote: Tue Nov 09, 2021 1:45 pm
NYCaviator wrote: Tue Nov 09, 2021 7:29 am Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
I think you are making this more complicated...

Ultimately, it boils down to what you transact.

In your example above, you have 201 shares made up of 2 lots. You could sell the 201 shares, and it wouldn't (anymore) have anything to do with fractional shares.

Likewise, you could sell 110 of your shares, again having nothing to do with fractional shares, which would sell off 1 lot and reduce the shares in the other.

Where fractional shares are relevant is when you are buying or selling fractional shares. If you place an order to sell the lot that contains 100.98 shares - the 0.98 shares will be transacted separately as a fractional trade (the 100 would sell ASAP, the fractional piece would process later in the day). Same as would happen if you decide to sell 0.5 shares, or sell $100 worth (the dollar amount would be converted to fractional shares).
I think I'm getting it! My concern though is the transfer of shares to a new broker. I've read that if you have fractional shares it liquidates the fractional portion when transferring but the whole shares can transfer in kind as a whole ETF share. Is that for every single lot where a fractional share has been purchased? Because over the course of say 10 years, that is a LOT of lots with fractional shares. Or, does it just group them all lots together to add up to whole shares, such that you'd have .99 or less of a share that would actually be liquidated?
It is the fractional shares left over after tabulating all total shares transferred, not per each lot
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by lazynovice »

NYCaviator wrote: Tue Nov 09, 2021 5:39 pm
SnowBog wrote: Tue Nov 09, 2021 1:45 pm
NYCaviator wrote: Tue Nov 09, 2021 7:29 am Also, as you add more money, do the fractional shares become full shares? For example if you own 100.98 shares and then purchase 100.02 shares, do you end up with 300 full shares, or 200 full shares, a lot of .98 shares, and a lot of .02 shares? I'm concerned how all of the fractional shares could affect cost basis when it comes time to sell.
I think you are making this more complicated...

Ultimately, it boils down to what you transact.

In your example above, you have 201 shares made up of 2 lots. You could sell the 201 shares, and it wouldn't (anymore) have anything to do with fractional shares.

Likewise, you could sell 110 of your shares, again having nothing to do with fractional shares, which would sell off 1 lot and reduce the shares in the other.

Where fractional shares are relevant is when you are buying or selling fractional shares. If you place an order to sell the lot that contains 100.98 shares - the 0.98 shares will be transacted separately as a fractional trade (the 100 would sell ASAP, the fractional piece would process later in the day). Same as would happen if you decide to sell 0.5 shares, or sell $100 worth (the dollar amount would be converted to fractional shares).
I think I'm getting it! My concern though is the transfer of shares to a new broker. I've read that if you have fractional shares it liquidates the fractional portion when transferring but the whole shares can transfer in kind as a whole ETF share. Is that for every single lot where a fractional share has been purchased? Because over the course of say 10 years, that is a LOT of lots with fractional shares. Or, does it just group them all lots together to add up to whole shares, such that you'd have .99 or less of a share that would actually be liquidated?
Looks like another user is doing this sort of transfer. I’ll post on that thread to confirm it is working the way we think it does.

viewtopic.php?f=1&t=362150
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by stan1 »

On 9/13/2021 I bought $1000 worth of VUSB in a Fidelity account.
My holdings are two lots:
19 shares purchased at 50.125
0.95 shares purchased at 50.1284

On 10/5/2021 I bought $4000 worth of VUSB
My holdings are in two additional lots:
79 shares purchased at $50.1183
0.811 shares purchased at $50.1183

So you can see on the 9/13 purchase the share price varied slightly for the fractional shares. On the 10/5 purchase the share price was the same. I am left with four lots. Since I use specific identification as the cost basis method when it comes time to sell I'd likely sweep up all of the fractional lots to clear them off the books.

For my equity positions I will continue to buy in integer shares. I prefer to buy ETFs in 100 share increments anyways so I don't have to look at pennies (most of the time). I know its a little OCD.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by 6NDone »

I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by UpperNwGuy »

6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by anon_investor »

6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
Thanks for testing. Sounds like if you had bought 0.938 shares, Fido would have transferred 5 whole shares.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by Explorer »

My experience at Fidelity has always been that the fractional share and full shares are separately traded (buy or sell) and as such their unit cost could be different. In rare cases, the unit cost is the same.

But in the scheme of things, I do not have an issue with such a process.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by tonyclifton »

lazynovice wrote: Tue Nov 09, 2021 8:43 am Regarding the share price being higher for the fractional share, there was a thread thus summer where several of us posted our experience that week.
I bought a $104.14 worth of IVV (IShares S&P 500) at Fidelity on 12/3/2021 and believe I paid the market price at the time the order was executed ($452.78).

This is in an HSA account and no lot information appears to be available on the website - maybe because lots don't matter for an HSA? None of my purchases in the HSA Fidelity accounts appear to have lot info.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by lazynovice »

tonyclifton wrote: Sat Dec 04, 2021 7:23 am
lazynovice wrote: Tue Nov 09, 2021 8:43 am Regarding the share price being higher for the fractional share, there was a thread thus summer where several of us posted our experience that week.
I bought a $104.14 worth of IVV (IShares S&P 500) at Fidelity on 12/3/2021 and believe I paid the market price at the time the order was executed ($452.78).

This is in an HSA account and no lot information appears to be available on the website - maybe because lots don't matter for an HSA? None of my purchases in the HSA Fidelity accounts appear to have lot info.
You should be able to see it under Activity for the account?
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by tonyclifton »

lazynovice wrote: Sat Dec 04, 2021 3:43 pm You should be able to see it under Activity for the account?
For sure, I can view the purchase under the Activity & Orders tab.
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by 6NDone »

UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
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mervinj7
Posts: 2496
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Re: Logistics of Fractional ETF Shares at Fidelity

Post by mervinj7 »

6NDone wrote: Sun Dec 12, 2021 5:20 am
UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
That's great news.
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anon_investor
Posts: 15111
Joined: Mon Jun 03, 2019 1:43 pm

Re: Logistics of Fractional ETF Shares at Fidelity

Post by anon_investor »

6NDone wrote: Sun Dec 12, 2021 5:20 am
UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
Was the 0.082 fractional share that was liquidated from the most recently purchased tax lot?
6NDone
Posts: 153
Joined: Tue Sep 28, 2021 5:01 am

Re: Logistics of Fractional ETF Shares at Fidelity

Post by 6NDone »

anon_investor wrote: Sun Dec 12, 2021 8:44 am
6NDone wrote: Sun Dec 12, 2021 5:20 am
UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
Was the 0.082 fractional share that was liquidated from the most recently purchased tax lot?

I can’t really tell to be honest. The 0.082 liquidation is still in process at Fidelity and hasn’t come over yet. When it does I’ll check and see if I can cross match it with the purchase order and report back.
100% US TSM
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anon_investor
Posts: 15111
Joined: Mon Jun 03, 2019 1:43 pm

Re: Logistics of Fractional ETF Shares at Fidelity

Post by anon_investor »

6NDone wrote: Sun Dec 12, 2021 8:49 am
anon_investor wrote: Sun Dec 12, 2021 8:44 am
6NDone wrote: Sun Dec 12, 2021 5:20 am
UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
Was the 0.082 fractional share that was liquidated from the most recently purchased tax lot?

I can’t really tell to be honest. The 0.082 liquidation is still in process at Fidelity and hasn’t come over yet. When it does I’ll check and see if I can cross match it with the purchase order and report back.
Thanks. With Fractional shares at Fidelity, I assume another option would have been to buy 0.918 shares of VTI to have a whole number of shares to transfer?
SnowBog
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Joined: Fri Dec 21, 2018 10:21 pm

Re: Logistics of Fractional ETF Shares at Fidelity

Post by SnowBog »

6NDone wrote: Sun Dec 12, 2021 8:49 am
anon_investor wrote: Sun Dec 12, 2021 8:44 am
6NDone wrote: Sun Dec 12, 2021 5:20 am
UpperNwGuy wrote: Sat Dec 04, 2021 5:56 am
6NDone wrote: Sat Dec 04, 2021 4:53 am I did an experiment to test how fractional shares are transferred. I purchased several lots of VTI at Fidelity and then transferred to Vanguard. Confirming that the fractional lots are summed up to whole shares and the remainder gets liquidated.

1 Share
1 Share
1 Share
.51 Share
.261 Share
.238 Share
.052 Share
.021 Share

4 whole shares were transferred to Vanguard, and the .082 share was liquidated.
How is Vanguard displaying the cost basis for those 4 whole shares?
Sorry for the late response, I was waiting for the cost basis to finally transfer over. The transfer came over as fractional and whole shares equaling 4, and the cost basis is identical to the price they were purchased at Fidelity.
Was the 0.082 fractional share that was liquidated from the most recently purchased tax lot?

I can’t really tell to be honest. The 0.082 liquidation is still in process at Fidelity and hasn’t come over yet. When it does I’ll check and see if I can cross match it with the purchase order and report back.
Presumably, this would follow whatever is designated on the account. I don't remember the setting at the moment, but I know for each account you can set the default as FIFO, LIFO, tax-sensitive, etc. This controls what shares are sold.

For my own setup, all my taxable accounts are set to the "tax-sensitive" option which attempts to minimize gains when selling. But I have switched this in the past to the "first in first out" (or maybe it was "lowest cost basis") option when I wanted to send highly appreciated shares to a UTMA (and then switched back to tax-sensitive.

Note, if select specific lots during your transaction, you override the default settings.
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