VSS or VFSAX - any pros/cons I'm missing?

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namenloseblonde
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VSS or VFSAX - any pros/cons I'm missing?

Post by namenloseblonde »

DH and I both hold VSS/VFSAX in our various accounts for rebalancing purposes - I have VSS in 401K, he has VFSAX in Roth. I can't remember why I chose one over the other when I established these positions - I think there was some sort of extra fee or redemption restriction on one or the other? Anyway, whatever issue there was seems to have been eliminated, so the only substantial difference now is the ER, which is .07 for VSS and .16 for VFSAX. Any reason not to convert VFSAX to VSS and save myself the extra .09 in ER costs? I generally end up rebalancing via my 401K anyway so DH's smaller position just sits.
livesoft
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by livesoft »

I also own both. I decided that Vanguard is a toy broker and doesn't know how to deal well with ETFs, so I own VFSAX at Vanguard where I just have dividends automatically reinvested in a "set-and-forget" account that I never look at and only holds this one single fund. My other brokerages are competent, so I own VSS at my non-Vanguard brokerages and do not automatically reinvest the dividends.
Last edited by livesoft on Thu Sep 22, 2022 3:51 pm, edited 1 time in total.
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arcticpineapplecorp.
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by arcticpineapplecorp. »

namenloseblonde wrote: Thu Sep 22, 2022 3:42 pm DH and I both hold VSS/VFSAX in our various accounts for rebalancing purposes - I have VSS in 401K, he has VFSAX in Roth. I can't remember why I chose one over the other when I established these positions - I think there was some sort of extra fee or redemption restriction on one or the other? Anyway, whatever issue there was seems to have been eliminated, so the only substantial difference now is the ER, which is .07 for VSS and .16 for VFSAX. Any reason not to convert VFSAX to VSS and save myself the extra .09 in ER costs? I generally end up rebalancing via my 401K anyway so DH's smaller position just sits.
they're the same fund, just one is mutual fund and one is ETF
vfsax is mutual fund
vss is ETF

ETFs are usually cheaper (at least at Vanguard for a corresponding mutual fund).

if you're comfortable using etfs in Roth then you can convert from vfsax to vss in Roth IRA. With Vanguard Brokerage I believe they'll convert it free of charge, you have to call them to complete that. You may be able to convert online too though I'm not sure of that.

a smaller expense ratio will save money over time. how much is dependent upon the amount of money in the fund/etf and how long you hold it. usually it's not huge savings unless you are talking millions invested.

if your husband's "smaller position" let's say is $100k, the difference between 0.16% for the mutual fund and 0.07% for the ETF would be:
$160 a year in costs via mutual fund
$70 a year in costs via etf
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namenloseblonde
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by namenloseblonde »

livesoft wrote: Thu Sep 22, 2022 3:50 pm I also own both. I decided that Vanguard is a toy broker and doesn't know how to deal well with ETFs...
Can you expand on this? I admittedly don't trade frequently but I have had no issues buying or selling VSS. I do automatically reinvest dividends, which I probably shouldn't - I'm sure I could take greater advantage of the fund's volatility if I swept them and waited for a down day.
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namenloseblonde
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by namenloseblonde »

arcticpineapplecorp. wrote: Thu Sep 22, 2022 3:51 pm
a smaller expense ratio will save money over time. how much is dependent upon the amount of money in the fund/etf and how long you hold it. usually it's not huge savings unless you are talking millions invested.

if your husband's "smaller position" let's say is $100k, the difference between 0.16% for the mutual fund and 0.07% for the ETF would be:
$160 a year in costs via mutual fund
$70 a year in costs via etf
Thanks - I hadn't bothered to do the mental math but that puts it in perspective. DH's position is around $50K right now so only about a $45/year savings. Eh. Maybe if I decide to turn off auto-reinvest in my account, I'll take care of it then.
jimcoomer
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by jimcoomer »

I've been buying VSS over the past few years and chose the ETF version because I remember a few years ago at least Vanguard charged a 0.25% purchase fee for the mutual fund version VFSAX, so that pushed me to the ETF version, but now I see that purchase fee is gone (but there still is a somewhat big expense ratio difference).

Anyways, yesterday and today I bought more VSS in exact dollar amounts (I learned from Bogleheads forum recently that Vanguard now has the ETF dollar purchase feature) so that really helps. I wished that Vanguard also offered market on close stock/ETF orders--this feature would essential make ETF orders very similar to mutual fund orders (exact dollar amount orders at the end of the day); so what I did yesterday and today was made the VSS market order at 3:59 PM EST.
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by livesoft »

namenloseblonde wrote: Thu Sep 22, 2022 4:01 pmCan you expand on this? I admittedly don't trade frequently but I have had no issues buying or selling VSS. I do automatically reinvest dividends, which I probably shouldn't - I'm sure I could take greater advantage of the fund's volatility if I swept them and waited for a down day.
Sure. In the past, I could never tell where my money was at Vanguard. Pending orders were hard to find. Settlement money was in limbo. Changing an order was difficult and slow to accomplish. No real-time updating of anything. I admit that I have made no trades at Vanguard in years.
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namenloseblonde
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by namenloseblonde »

livesoft wrote: Thu Sep 22, 2022 4:09 pm
namenloseblonde wrote: Thu Sep 22, 2022 4:01 pmCan you expand on this? I admittedly don't trade frequently but I have had no issues buying or selling VSS. I do automatically reinvest dividends, which I probably shouldn't - I'm sure I could take greater advantage of the fund's volatility if I swept them and waited for a down day.
Sure. In the past, I could never tell where my money was at Vanguard. Pending orders were hard to find. Settlement money was in limbo. Changing an order was difficult and slow to accomplish. No real-time updating of anything. I admit that I have made no trades at Vanguard in years.
Good to know. Interestingly enough, I am having similar problems right now - they are upgrading their interface and moving old mutual fund-only accounts to brokerage accounts, which is making the website clunky and hard to navigate. I'm sure it will be fine when it's done, but right now it's incredibly annoying. No other option at the moment, though, since my 401K is held there.
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namenloseblonde
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by namenloseblonde »

jimcoomer wrote: Thu Sep 22, 2022 4:05 pm Anyways, yesterday and today I bought more VSS in exact dollar amounts (I learned from Bogleheads forum recently that Vanguard now has the ETF dollar purchase feature) so that really helps. I wished that Vanguard also offered market on close stock/ETF orders--this feature would essential make ETF orders very similar to mutual fund orders (exact dollar amount orders at the end of the day); so what I did yesterday and today was made the VSS market order at 3:59 PM EST.
Good to know - that is a nice feature! I agree close-of-day would be good to have as well - I can't tell you how many times I have dithered over a .02 spread when making a trade of less than .1% of my portfolio! :shock: :D
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by grabiner »

There used to be a significant advantage for the ETF share class, as the mutual fund had no Admiral shares and thus a higher expense ratio, and the 0.75% purchase fee on the mutual fund was several times higher than the bid/ask spread on the ETF.

But even now, it looks like VSS is better. Vanguard says that the bid/ask spread on VSS averages 0.06%, but that is a one-time cost for buying and selling. And the 0.09% expense difference between ETF and Admiral shares is still much higher than for most mutual funds.

(I have held VSS since it started in 2009.)
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kelway
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Re: VSS or VFSAX - any pros/cons I'm missing?

Post by kelway »

Hello to my good friends still holding on to VSS/VFSAX even after all the blood. Someday. Someday....
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