Author Topic: Accidentally Day Traded Today, Made $5  (Read 1515 times)

stashing_it

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Accidentally Day Traded Today, Made $5
« on: September 23, 2017, 12:07:28 AM »
Today I intended to transfer some bond index funds (VCLT) that I have from the Vanguard index fund to the Vanguard Admiral Shares.   My purpose behind that is so I could set up auto-investing, which you can do with mutual funds but not index funds

So I sold the bond index fund and went to purchase the Mutual fund, and found out that even though the two have the same Expense Ratio, the Mutual fund also has a 1% front load fee.    I was not keen on paying that, so instead I re-purchased the same shares I had just sold, and ended up getting them for 5 dollars or so less (total)     Ka-ching!

secondcor521

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Re: Accidentally Day Traded Today, Made $5
« Reply #1 on: September 23, 2017, 12:34:47 AM »
Weird, I had never heard of Vanguard having a front-end load.  What fund was it?

stashing_it

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Re: Accidentally Day Traded Today, Made $5
« Reply #2 on: September 23, 2017, 09:19:33 AM »
Weird, I had never heard of Vanguard having a front-end load.  What fund was it?

VLTCX

purchase fee is right there on the page description, I just didn't think to look for it   https://personal.vanguard.com/us/funds/snapshot?FundId=1947&FundIntExt=INT

When I did some searching on Bogleheads, there was some discussion about how it isn't really a fee that is costing you, because the fee money goes into the fund and becomes part of the NAV.    I didn't really understand that explanation, so I'm doing a poor job of explaining it.    Since I don't understand the fee, it just seems like an expense to me, and means that there is no reason to invest in that fund

secondcor521

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Re: Accidentally Day Traded Today, Made $5
« Reply #3 on: September 23, 2017, 11:05:03 AM »
Thanks for the answer!

What little I know about fees like that is that they typically are paid to the financial adviser that sells you the fund, so it is a sales commission just like people normally pay to realtors when they buy or sell a house.  In this case Vanguard is saying that the money is paid into the fund.  But since you're not ending up with more bonds for your money, that money probably goes to the expenses of the fund itself.  To me it feels like prepaying the expense ratio or shifting the expense ratio from an annual basis to an upfront basis.

Thanks again.