Vanguard vs others

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Plz
Posts: 49
Joined: Tue Oct 09, 2018 10:26 pm

Vanguard vs others

Post by Plz » Tue Oct 09, 2018 10:46 pm

Hi all,

In the past, I’ve put most of my investments into Vanguard funds, and I don’t plan to touch them until retirement (knock on wood!).

However, I’m noticing now that other firms provide very similar products (total US market, international markets, emerging markets, and total market bond funds/ETFs) at lower costs, which is one of the main advantages of indexing. Some of these include Blackrock (0.03% for total US market) and Fidelity (0.00% for their new ZERO indexes).

1) Does it make sense to make my future contributions at one of those places?

2) I often hear that Vanguard is more tax efficient, and thus perhaps a 0.01% or even a 0.04% expense differential doesn’t come close to offsetting Vanguard’s tax advantage. Why is Vanguard more tax efficient and how does it actually turn out in practice?

3) Are there any reasons I should put FUTURE contributions at Vanguard over Fidelity or Blackrock? What are the main advantages of Fidelity/Blackrock/another firm with low expense index funds over Vanguard?

Thanks in advance!!

Dandy
Posts: 5462
Joined: Sun Apr 25, 2010 7:42 pm

Re: Vanguard vs others

Post by Dandy » Wed Oct 10, 2018 7:31 am

A few thoughts.
1. Vanguard's success at providing low cost mutual funds has resulted in changing the industry for the better. Now it faces competition on its very core advantage.
2. Other providers offer possibly better services, web sites etc. than Vanguard in addition to creating competitive costs.
3. I am pretty much a Vanguard customer and very satisfied. I don't think I will move my assets to get a few basis point expense advantage.
4. Some providers may be using the lower costs as a "loss leader" to attract new customers and hoping they will make profits on other products and services.
5. It will be interesting to see what Vanguard's response will be. Even lower costs? Better emphasis on services? Stay the course?
6. I like the fact that Vanguard's lower costs is a long standing philosophy not something to lure customers into the fold for possible other reasons or because they are really higher cost firms that are acting only out of the loss of customers or profit.
7. Costs and services matter. So, other than having to deal with multiple firms it up to the individual to do what is best for them.

rkhusky
Posts: 5874
Joined: Thu Aug 18, 2011 8:09 pm

Re: Vanguard vs others

Post by rkhusky » Wed Oct 10, 2018 7:41 am

Vanguard's mutual funds are more tax efficient because of their patented linking of mutual funds and ETF's. Their ETF's are not necessarily more tax efficient than other firms. Tax efficiency is only important for taxable accounts, not IRA's, 401k's, etc.

Adding another firm into the mix adds complexity for rebalancing, taxes, etc., which could be eliminated by moving all your investments from Vanguard to the other firm.

And note that the Fidelity Zero funds use a proprietary Fidelity index, which has limited history. So, there is some risk in using those funds. But the few extra dollars saved in expenses might be enough for some investors to take the (probably small) risk that the Fidelity index will have worse returns than a well established index.

JonSharpe
Posts: 9
Joined: Tue Oct 09, 2018 11:15 am
Location: Philadelphia, PA

Re: Vanguard vs others

Post by JonSharpe » Wed Oct 10, 2018 7:52 am

I also have the bulk of my portfolio at Vanguard and agree with the others here that I will keep my money there. For a few basis points, it's not worth it for me to consider adding the extra complexity of tracking additional accounts and funds. I also like supporting Vanguard's whole philosophy around putting retail investors first and leading the charge in low fees. You need to vote with your dollars! Everyone else is late to the game.

User avatar
DaftInvestor
Posts: 4077
Joined: Wed Feb 19, 2014 10:11 am

Re: Vanguard vs others

Post by DaftInvestor » Wed Oct 10, 2018 7:56 am

For Tax-Advantaged Accounts (IRAs): Use Fidelity. Lowest Fees (zero) and tax efficiency doesn't matter.
For Taxable Accounts: Use Vanguard.

BogleMelon
Posts: 1503
Joined: Mon Feb 01, 2016 11:49 am

Re: Vanguard vs others

Post by BogleMelon » Wed Oct 10, 2018 7:57 am

"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Jack FFR1846
Posts: 8065
Joined: Tue Dec 31, 2013 7:05 am

Re: Vanguard vs others

Post by Jack FFR1846 » Wed Oct 10, 2018 8:05 am

Vanguard is DEC (Digital Equipment Corp). DEC overwhelmed the computing industry by making smaller, cheaper, better computer systems than the incumbents (primarily IBM). They did this for years and became the second biggest computer company on the planet. They dabbled with desktops and decided that nobody would want them, so stopped at workstations that were just a bit bigger, catering to the scientist and industrial markets. But the upstarts like Compaq and Dell and their closest equal, HP continued to smallerize and pretty soon, DEC was out of business. I'm not saying Vanguard is going out of business.....just that they've stopped with their progression of smallerizing costs, which was the revolution that they started. Schwab and Fidelity are the Dell and Compaq of the investing industry now.

At the moment, in my opinion, there's virtually no difference using Vanguard, Fidelity or Schwab. I would have included TDAmeritrade, but with their removal of all Vanguard ETFs from their NTF offerings, aside from their excellent web page (best I've seen), they aren't really participating in the mutual fund/ETF side of investing.
Bogle: Smart Beta is stupid

livesoft
Posts: 62838
Joined: Thu Mar 01, 2007 8:00 pm

Re: Vanguard vs others

Post by livesoft » Wed Oct 10, 2018 8:07 am

You won't know what you are missing until you try it out. I have been a Vanguard client for over 35 years. I've had money at Fidelity for over 25 years. Of course, both of them have changed since I started with them.

It is not complicated to use 2 or more firms nowadays. It is easier to rebalance, too, since those pesky 30 day Vanguard restrictions go away and those Fidelity early sales redemption hits go away, too.

I just did my 2017 tax return this week with tax prep software and the imported Vanguard 1099s created errors when trying to e-file, but the downloaded Fidelity 1099s did not. The errors were trivial to fix, but should not have happened. I might have assumed that all 1099s from all financial institutions were like Vanguard, but I know that Fidelity, TDAmeritrade, and WellsTrade did not give the same problem as the Vanguard 1099s. I know what I am missing at Vanguard.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
BoglePaul
Posts: 95
Joined: Tue Jul 29, 2014 2:34 pm

Re: Vanguard vs others

Post by BoglePaul » Wed Oct 10, 2018 8:09 am

With Fidelity:

1) Your deal flow is sold to high speed traders so you may wind up paying more when you place a trade for the ETF (only Vanguard and Interactive Brokers do not sell your deal flow).
2) Fidelity pays less dividends on money market funds than Vanguard (so you save .03% on the ETF but Fidelity recoups .30% on your idle cash).
3) They scheme to get their customers to purchase their other products (there is an office building full of people designing methods to convert you to a profitable customer).
4) They aim to make up the costs by displaying lots of market info and news information to stimulate your into a trade when you login to your account. The Vanguard login and dashboard are free from information that can distract you from your goals.

There is no free lunch. With Vanguard we pay for what we get. For me, transparency wins out.
Last edited by BoglePaul on Wed Oct 10, 2018 8:22 am, edited 2 times in total.

User avatar
BoglePaul
Posts: 95
Joined: Tue Jul 29, 2014 2:34 pm

Re: Vanguard vs others

Post by BoglePaul » Wed Oct 10, 2018 8:14 am

livesoft wrote:
Wed Oct 10, 2018 8:07 am
You won't know what you are missing until you try it out. I have been a Vanguard client for over 35 years. I've had money at Fidelity for over 25 years. Of course, both of them have changed since I started with them.

It is not complicated to use 2 or more firms nowadays. It is easier to rebalance, too, since those pesky 30 day Vanguard restrictions go away and those Fidelity early sales redemption hits go away, too.

I just did my 2017 tax return this week with tax prep software and the imported Vanguard 1099s created errors when trying to e-file, but the downloaded Fidelity 1099s did not. The errors were trivial to fix, but should not have happened. I might have assumed that all 1099s from all financial institutions were like Vanguard, but I know that Fidelity, TDAmeritrade, and WellsTrade did not give the same problem as the Vanguard 1099s. I know what I am missing at Vanguard.
In 2016 my Fidelity 1099 imported with errors. They rolled out a fix two weeks later and I re-imported but it delayed me from filing my taxes. With Vanguard my 1099 has always been correct. After 2016, I feel like this could happen with any of them so we just wait until March/April to import and give them all time to workout their kinks.

Atgard
Posts: 404
Joined: Wed Apr 09, 2014 2:02 pm

Re: Vanguard vs others

Post by Atgard » Wed Oct 10, 2018 8:14 am

Dandy wrote:
Wed Oct 10, 2018 7:31 am
6. I like the fact that Vanguard's lower costs is a long standing philosophy not something to lure customers into the fold for possible other reasons or because they are really higher cost firms that are acting only out of the loss of customers or profit.
This to me nails it. If you already have a Fidelity account for other reasons or have access to Blackrock instead of Vanguard in your 401K or whatever, then yes their funds are fine and basically match Vanguard's (a few 0.01% either way won't make a difference).

But Vanguard's entire philosophy and corporate structure is as a non-profit that exists to provide the lowest cost investments to clients/owners. Other companies are for-profit, trying to match Vanguard with some loss leaders in the hopes of making a profit off them somehow, by them investing in other expensive funds, or eventually raising their fees. Their goal is to maximize profits for themselves as a company.

So just like it's fine to use a rewards credit card and reap the benefits (paid for by others who pay late and are hit with exorbitant interest rates), using those other low-cost offerings is fine. But I'd rather support the company that introduced them and I know will keep them around. Those low-cost index funds would not exist without Vanguard. So I'm sticking with them.

hdas
Posts: 378
Joined: Thu Jun 11, 2015 8:24 am

Re: Vanguard vs others

Post by hdas » Wed Oct 10, 2018 8:24 am

Idk about other providers, but you can count on Vanguard website to fail when most needed. H
Stay the course and buy some more.

User avatar
ruralavalon
Posts: 14236
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Vanguard vs others

Post by ruralavalon » Wed Oct 10, 2018 8:28 am

A few hundredths of a percent difference in expense ratios will likely be irrelevant to outcome.

Other factors are likely to outweigh such small differences, like the differences in the indexes used, tracking error, tax-efficiency if held in a taxable account, and securities lending policy.

Vanguard funds aremore tax-efficient because of their unique fund structure, with the ETFs being just another share class of the mutual funds

Vanguard has by far the largest selection of low expense mutual funds offered anywhere. I find their website easy to use, and the customer service is good.
Last edited by ruralavalon on Wed Oct 10, 2018 8:38 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
randomizer
Posts: 1540
Joined: Sun Jul 06, 2014 3:46 pm

Re: Vanguard vs others

Post by randomizer » Wed Oct 10, 2018 8:35 am

I'm sticking with Vanguard because I am uncurably biased, but also because I think I can trust them (relatively speaking). They are the most fiduciary of the fund companies because of the DNA they got from Jack, and their unique structure. I expect them to win on tax efficiency and tracking costs, and I know their costs will always be as low as they can make them. Having said that, you could make the argument for diversifying across companies, but I trust Vanguard enough that I prefer to keep things as simple and consolidated as possible. After a bit of complexity crept in, I have managed to put the genie back in the bottle and put everything in the simplest possible three-fund portfolio, with all my eggs in the Vanguard basket.
87.5:12.5, EM tilt — HODL the course!

CRTR
Posts: 156
Joined: Sat Apr 11, 2015 1:15 pm

Re: Vanguard vs others

Post by CRTR » Wed Oct 10, 2018 8:54 am

https://www.financial-planning.com/opin ... efficiency

A good read. Roth also makes the point that if using a taxable account and Fidelity raises fees down the road, you may be locked in due to capital gains exposure.

HEDGEFUNDIE
Posts: 1189
Joined: Sun Oct 22, 2017 2:06 pm

Re: Vanguard vs others

Post by HEDGEFUNDIE » Wed Oct 10, 2018 9:12 am

hdas wrote:
Wed Oct 10, 2018 8:24 am
Idk about other providers, but you can count on Vanguard website to fail when most needed. H
Could be a feature, not a bug. It’s Vanguards way of helping us stay the course!😂

hdas
Posts: 378
Joined: Thu Jun 11, 2015 8:24 am

Re: Vanguard vs others

Post by hdas » Wed Oct 10, 2018 9:16 am

HEDGEFUNDIE wrote:
Wed Oct 10, 2018 9:12 am
hdas wrote:
Wed Oct 10, 2018 8:24 am
Idk about other providers, but you can count on Vanguard website to fail when most needed. H
Could be a feature, not a bug. It’s Vanguards way of helping us stay the course!😂
That could only be true if their website failed at random times.......we know that's not the case. H
Stay the course and buy some more.

megabad
Posts: 828
Joined: Fri Jun 01, 2018 4:00 pm

Re: Vanguard vs others

Post by megabad » Wed Oct 10, 2018 9:48 am

Plz wrote:
Tue Oct 09, 2018 10:46 pm
Hi all,

In the past, I’ve put most of my investments into Vanguard funds, and I don’t plan to touch them until retirement (knock on wood!).

However, I’m noticing now that other firms provide very similar products (total US market, international markets, emerging markets, and total market bond funds/ETFs) at lower costs, which is one of the main advantages of indexing. Some of these include Blackrock (0.03% for total US market) and Fidelity (0.00% for their new ZERO indexes).

1) Does it make sense to make my future contributions at one of those places?
Possibly. Fidelity has a good website and brick and mortar presence. (I know Vanguard technically has a brick and mortar presence but not for most of us.) I don't have experience or knowledge of Blackrock since I can buy their ETFs elsewhere.

2) I often hear that Vanguard is more tax efficient, and thus perhaps a 0.01% or even a 0.04% expense differential doesn’t come close to offsetting Vanguard’s tax advantage. Why is Vanguard more tax efficient and how does it actually turn out in practice?
As above. Mutual Funds are because of patented ETF share class. It can be quite a few basis points difference depending on your tax situation and the distributions.

3) Are there any reasons I should put FUTURE contributions at Vanguard over Fidelity or Blackrock? What are the main advantages of Fidelity/Blackrock/another firm with low expense index funds over Vanguard?
If you prefer ETFs over mutual funds, than the advantages would be if you wanted brick and mortar presence or if you enjoyed the other websites more (more reports, trading info, comparision tools, etc). If you prefer mutual funds, I would personally lean toward Vanguard.

Thanks in advance!!

Plz
Posts: 49
Joined: Tue Oct 09, 2018 10:26 pm

Re: Vanguard vs others

Post by Plz » Wed Oct 10, 2018 9:57 am

Some quotes from other members about tax efficiency are below. Sorry, I’m just plain dense. I still don’t understand why linking mutual funds and ETFs matter from a tax perspective. Can someone perhaps provide an example of realizing this tax advantage when using, say, Vanguard’s total stock market index versus another firm’s?
Vanguard's mutual funds are more tax efficient because of their patented linking of mutual funds and ETF's. Their ETF's are not necessarily more tax efficient than other firms. Tax efficiency is only important for taxable accounts, not IRA's, 401k's, etc.
Vanguard funds aremore tax-efficient because of their unique fund structure, with the ETFs being just another share class of the mutual funds

Plz
Posts: 49
Joined: Tue Oct 09, 2018 10:26 pm

Re: Vanguard vs others

Post by Plz » Wed Oct 10, 2018 9:59 am

megabad wrote:
Wed Oct 10, 2018 9:48 am
Plz wrote:
Tue Oct 09, 2018 10:46 pm
Hi all,

In the past, I’ve put most of my investments into Vanguard funds, and I don’t plan to touch them until retirement (knock on wood!).

However, I’m noticing now that other firms provide very similar products (total US market, international markets, emerging markets, and total market bond funds/ETFs) at lower costs, which is one of the main advantages of indexing. Some of these include Blackrock (0.03% for total US market) and Fidelity (0.00% for their new ZERO indexes).

1) Does it make sense to make my future contributions at one of those places?
Possibly. Fidelity has a good website and brick and mortar presence. (I know Vanguard technically has a brick and mortar presence but not for most of us.) I don't have experience or knowledge of Blackrock since I can buy their ETFs elsewhere.

2) I often hear that Vanguard is more tax efficient, and thus perhaps a 0.01% or even a 0.04% expense differential doesn’t come close to offsetting Vanguard’s tax advantage. Why is Vanguard more tax efficient and how does it actually turn out in practice?
As above. Mutual Funds are because of patented ETF share class. It can be quite a few basis points difference depending on your tax situation and the distributions.

3) Are there any reasons I should put FUTURE contributions at Vanguard over Fidelity or Blackrock? What are the main advantages of Fidelity/Blackrock/another firm with low expense index funds over Vanguard?
If you prefer ETFs over mutual funds, than the advantages would be if you wanted brick and mortar presence or if you enjoyed the other websites more (more reports, trading info, comparision tools, etc). If you prefer mutual funds, I would personally lean toward Vanguard.

Thanks in advance!!
For me, ETFs and mutual funds ultimately serve the same purpose. I’m indifferent between the two unless I’m looking for some kind of arbitrage (which I’m not).

Regarding question 2, could you please walk through an example? FWIW, right now I have everything automatically reinvested.

viz
Posts: 141
Joined: Fri May 04, 2018 11:22 pm

Re: Vanguard vs others

Post by viz » Wed Oct 10, 2018 10:10 am

BoglePaul wrote:
Wed Oct 10, 2018 8:09 am
With Fidelity:

1) Your deal flow is sold to high speed traders so you may wind up paying more when you place a trade for the ETF (only Vanguard and Interactive Brokers do not sell your deal flow).
I always thought that high frequency traders make money by making a fraction of a cent per stock and it was a volume business based on arbitrage between bid and ask. Does it really affect retail investors if a broker sends deal flow to such traders?
BoglePaul wrote:
Wed Oct 10, 2018 8:09 am

2) Fidelity pays less dividends on money market funds than Vanguard (so you save .03% on the ETF but Fidelity recoups .30% on your idle cash).
3) They scheme to get their customers to purchase their other products (there is an office building full of people designing methods to convert you to a profitable customer).

True on 2 & 3. However for an average investor on this forum a polite no to sales call and fidelity and Schwab back off & never call again. This has been my experience
BoglePaul wrote:
Wed Oct 10, 2018 8:09 am

4) They aim to make up the costs by displaying lots of market info and news information to stimulate your into a trade when you login to your account. The Vanguard login and dashboard are free from information that can distract you from your goals.

There is no free lunch. With Vanguard we pay for what we get. For me, transparency wins out.
Agreed on transparency. Again for distraction, there is enough noise around us (news, blogs, etc) that if you are not able to withstand the information onslaught, you will make the same mistakes.
Full Disclosure: don't have vanguard account, have vanguard ETF. Taxable account with Merrill Edge, retirement with fidelity and Schwab account is for espp and stock compensation

retiringwhen
Posts: 600
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: Vanguard vs others

Post by retiringwhen » Wed Oct 10, 2018 10:32 am

Plz wrote:
Wed Oct 10, 2018 9:57 am
Some quotes from other members about tax efficiency are below. Sorry, I’m just plain dense. I still don’t understand why linking mutual funds and ETFs matter from a tax perspective. Can someone perhaps provide an example of realizing this tax advantage when using, say, Vanguard’s total stock market index versus another firm’s?
Vanguard's mutual funds are more tax efficient because of their patented linking of mutual funds and ETF's. Their ETF's are not necessarily more tax efficient than other firms. Tax efficiency is only important for taxable accounts, not IRA's, 401k's, etc.
Vanguard funds aremore tax-efficient because of their unique fund structure, with the ETFs being just another share class of the mutual funds
Quick answer is the mutual fund pushes out low-cost shares into the ETF class where they don't get redeemed (or they are traded out to institutional investors in a non-taxable transaction) thus avoiding ever having to sell them in a taxable manner.

BTW, I was at the Bogleheads conference last week, and Joel Dickson of the Planner and the Geek Podcast mentioned that he does not think that other Mutual Fund Companies are likely to follow the Vanguard process after the patent expires. His reasoning is that early on, after the patent was awarded, they got a small amount in interest in licensing the patent, but they have not really heard anything from any other companies at all for several years. In other words, we may discuss it as a differentiator on the forum, but the rest of the industry does not seem to put too much value on it.

Of course, he did not say how much compensation Vanguard wants/wanted for licesning the patent. They may have just pushed the interest out to 2022.

Plz
Posts: 49
Joined: Tue Oct 09, 2018 10:26 pm

Re: Vanguard vs others

Post by Plz » Wed Oct 10, 2018 8:32 pm

retiringwhen wrote:
Wed Oct 10, 2018 10:32 am
Plz wrote:
Wed Oct 10, 2018 9:57 am
Some quotes from other members about tax efficiency are below. Sorry, I’m just plain dense. I still don’t understand why linking mutual funds and ETFs matter from a tax perspective. Can someone perhaps provide an example of realizing this tax advantage when using, say, Vanguard’s total stock market index versus another firm’s?
Vanguard's mutual funds are more tax efficient because of their patented linking of mutual funds and ETF's. Their ETF's are not necessarily more tax efficient than other firms. Tax efficiency is only important for taxable accounts, not IRA's, 401k's, etc.
Vanguard funds aremore tax-efficient because of their unique fund structure, with the ETFs being just another share class of the mutual funds
Quick answer is the mutual fund pushes out low-cost shares into the ETF class where they don't get redeemed (or they are traded out to institutional investors in a non-taxable transaction) thus avoiding ever having to sell them in a taxable manner.

BTW, I was at the Bogleheads conference last week, and Joel Dickson of the Planner and the Geek Podcast mentioned that he does not think that other Mutual Fund Companies are likely to follow the Vanguard process after the patent expires. His reasoning is that early on, after the patent was awarded, they got a small amount in interest in licensing the patent, but they have not really heard anything from any other companies at all for several years. In other words, we may discuss it as a differentiator on the forum, but the rest of the industry does not seem to put too much value on it.

Of course, he did not say how much compensation Vanguard wants/wanted for licesning the patent. They may have just pushed the interest out to 2022.
I see! I think I’m beginning to see the light...in what situations would Vanguard need to push out shares?

retiringwhen
Posts: 600
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: Vanguard vs others

Post by retiringwhen » Wed Oct 10, 2018 8:47 pm

Plz wrote:
Wed Oct 10, 2018 8:32 pm
retiringwhen wrote:
Wed Oct 10, 2018 10:32 am
Plz wrote:
Wed Oct 10, 2018 9:57 am
Some quotes from other members about tax efficiency are below. Sorry, I’m just plain dense. I still don’t understand why linking mutual funds and ETFs matter from a tax perspective. Can someone perhaps provide an example of realizing this tax advantage when using, say, Vanguard’s total stock market index versus another firm’s?
Quick answer is the mutual fund pushes out low-cost shares into the ETF class where they don't get redeemed (or they are traded out to institutional investors in a non-taxable transaction) thus avoiding ever having to sell them in a taxable manner.
I see! I think I’m beginning to see the light...in what situations would Vanguard need to push out shares?
Whenever Vanguard needs to fulfill an order to redeem ETF shares from an institutional trading partner, they simply deliver the low cost shares. It is a core feature of all ETF's to keep the prices near NAV (the ETF creates or destroys ETF shares by trading in the market for the underlying securities) , such as when there is pressure to increase price above NAV. The Vanguard system has the advantage of being able to move the low-cost shares out of the mutual fund as well as the ETF thus reducing costs. There are also advantages on the creation side I believe, but I am not as clear on how that works.

Plz
Posts: 49
Joined: Tue Oct 09, 2018 10:26 pm

Re: Vanguard vs others

Post by Plz » Wed Oct 10, 2018 8:54 pm

retiringwhen wrote:
Wed Oct 10, 2018 8:47 pm
Plz wrote:
Wed Oct 10, 2018 8:32 pm
retiringwhen wrote:
Wed Oct 10, 2018 10:32 am
Plz wrote:
Wed Oct 10, 2018 9:57 am
Some quotes from other members about tax efficiency are below. Sorry, I’m just plain dense. I still don’t understand why linking mutual funds and ETFs matter from a tax perspective. Can someone perhaps provide an example of realizing this tax advantage when using, say, Vanguard’s total stock market index versus another firm’s?
Quick answer is the mutual fund pushes out low-cost shares into the ETF class where they don't get redeemed (or they are traded out to institutional investors in a non-taxable transaction) thus avoiding ever having to sell them in a taxable manner.
I see! I think I’m beginning to see the light...in what situations would Vanguard need to push out shares?
Whenever Vanguard needs to fulfill an order to redeem ETF shares from an institutional trading partner, they simply deliver the low cost shares. It is a core feature of all ETF's to keep the prices near NAV (the ETF creates or destroys ETF shares by trading in the market for the underlying securities) , such as when there is pressure to increase price above NAV. The Vanguard system has the advantage of being able to move the low-cost shares out of the mutual fund as well as the ETF thus reducing costs. There are also advantages on the creation side I believe, but I am not as clear on how that works.
I see! Thank you!!

Dead Man Walking
Posts: 727
Joined: Wed Nov 07, 2007 6:51 pm

Re: Vanguard vs others

Post by Dead Man Walking » Thu Oct 11, 2018 1:05 am

Many posts compare Vanguard, Fidelity, and Schwab. What about others such as the new Chase You Invest that offer free trades for mutual funds, ETFs, stocks, and fixed income investments?

DMW

User avatar
Earl Lemongrab
Posts: 5813
Joined: Tue Jun 10, 2014 1:14 am

Re: Vanguard vs others

Post by Earl Lemongrab » Thu Oct 11, 2018 2:20 am

Dead Man Walking wrote:
Thu Oct 11, 2018 1:05 am
Many posts compare Vanguard, Fidelity, and Schwab. What about others such as the new Chase You Invest that offer free trades for mutual funds, ETFs, stocks, and fixed income investments?
Some of us like Merrill Edge. With sufficient holdings you get free ETF trades and they have nice transfer bonuses.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

User avatar
BoglePaul
Posts: 95
Joined: Tue Jul 29, 2014 2:34 pm

Re: Vanguard vs others

Post by BoglePaul » Thu Oct 11, 2018 3:02 am

Dead Man Walking wrote:
Thu Oct 11, 2018 1:05 am
Many posts compare Vanguard, Fidelity, and Schwab. What about others such as the new Chase You Invest that offer free trades for mutual funds, ETFs, stocks, and fixed income investments?

DMW
What about Wells Fargo? Stick with Vanguard, Fidelity, and Schwab.

Post Reply