The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: fund4tomorrow on December 27, 2019, 02:00:04 PM
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I came across a random article recently about how Vanguard (and others) uses heartbeat trades, which has led me to more questions about the process and to what extent does it cover (ETFs and Mutual Index Funds), but I'm having a problem finding exactly what is "covered" or protected by these heartbeat trades. Do these heartbeat trades protect "from taxation purposes of capital gains if they are continuously held" both ETFs and Index Mutual Funds or just ETFs?
I have been on the fence for a long time on whether or not to use ETFs of the same funds I currently own (say VFIAX, VTIAX and VTSAX) and want to know if they are covered vs. just ETFs alone. I own admiral shares of these so I can see I'm paying the same amount of expenses, but I do not miss out on any potential tax savings if I continue to buy mutual fund shares vs. individual ETFs regularly, even if that will create more work for me vs. automatic investing.
The heartbeat trade articles I've read sound very interesting and the fact that Vanguard patented their system has have me thinking twice about starting new positions in Fidelity funds that track the same index for more than half the expense.
I'm a very recent investor (just a few years) to Vanguard Index Mutual Funds and could not find any posted capital gains for the funds I own. Sorry for the long post, but I'm curious if Vanguard Index Mutual Funds are covered by the Heartbeat trades from capital gains as well?
Thanks you All
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This doesn't answer you question but here are the cap gains for Vanguard funds and ETFs.
http://www.vanguard.com/pdf/FA117420.pdf
Cap gains for VTI/VTSAX are nearly equivalent.
VTI: 0.84/164 = .5%
VTSAX: 0.41/80 = .5%