Author Topic: VANGUARD ETF's vs. Admiral Funds  (Read 2098 times)

DeltaT

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VANGUARD ETF's vs. Admiral Funds
« on: December 04, 2017, 10:23:37 AM »
There may be a thread somewhere else on here about this, but in general, why do the vanguard ETF's not get much attention? They are nearly the same in terms of expense ratio. I actually also like the ability to see intraday fluctuation as well (not that it matters, just nice when I login knowing I'm seeing real time market values). Is there any sort of tax reason as to why you would want ETF's over the mutual fund equivalents? Or vice versa. I've done some research and I've found little nuances here and there. For instance you can convert an ETF to the mutual fund equivalent, but not vice versa. I am just struggling with understanding why you would want to do that if the expense ratios are the same? . I have looked at the bogleheads link describing the differences. That link basically just reinforced my thought as to why the ETF's don't seem to get much attention. Maybe my question is, what are the disadvantages to ETF's (vanguard speaking)? Curious about your all's feedback on this

wienerdog

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #1 on: December 04, 2017, 07:10:24 PM »
Disadvantage is the bid and ask difference.  You don't have that in mutual funds.  In reality that probably doesn't amount to much in the long run.  You also can't buy an exact dollar amount of an ETF.  That said I mainly use ETFs besides VTRIX just because they don't have an equivalent.

Radagast

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #2 on: December 04, 2017, 09:38:19 PM »
It's been asked quite a few times. A few points:

Reasons for Mutual funds: Most importantly, mutual funds can be automated to keep you, the weakest link, out of the system. Also, they don't have spreads and can be bought down to the last cent. For illiquid things like certain bonds there are arguments that the market price of an ETF can vary widely from the underlying assets, especially in a crisis, which makes the mutual fund better. Mutual funds transact at the end of the day when the price is on average a little higher, which might add a small preference to people who need to sell regularly.

Reasons for ETFs: They are more flexible for tax purposes and just generally more maneuverable. You can easily transfer them between brokers in pursuit of broker sign-up bonuses. Vanguard has a 60-day no-buy-back rule for mutual funds which is super irritating for capital gain/loss harvesting, but ETF's trade freely. Non-Vanguard mutual funds have unfavorable tax treatment, which would make you tend to prefer ETF's at Schwab or Fidelity for taxable accounts in any case. You are buying earlier in the day when, on average, prices should be lower and the additional ups and downs should also benefit regular purchasers. There are more stupid things you can do with them (note: stupid things are stupid).

chasesfish

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #3 on: December 05, 2017, 06:03:21 AM »
I own both.

Some Vanguard ETFs, but also own IJR, IJH, and ITOT

stashing_it

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #4 on: December 07, 2017, 09:22:52 PM »
I use vanguard mutual funds,  VTSAX and others, preferentially over the index funds, such as the nearly identical VTI, because I set up an automatic deposit, which I can't do with the index funds.   (Although vanguard does seem to be able to automatically reinvest index fund dividends just fine)

With This Herring

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #5 on: December 07, 2017, 09:35:21 PM »
*snip*
 For instance you can convert an ETF to the mutual fund equivalent, but not vice versa.
*snip*

You have this backward.  You can convert mutual fund shares to ETF shares, but not the reverse.
Vanguard ETF FAQs - Converting to ETF shares

Car Jack

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #6 on: December 08, 2017, 08:01:01 PM »
They're the same.  The minor differences are insignificant.  I hold both and if there's some advantage, I'll take whichever gives me the advantage. 

Indexer

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Re: VANGUARD ETF's vs. Admiral Funds
« Reply #7 on: December 09, 2017, 06:33:10 AM »
For me...
Taxable accounts: ETFs all set to Specific Identification cost basis.
IRAs/401k: mutual funds.

Logic: Mutual funds are friendly to automatic contributions now, automatic distributions in retirement, and they help the investor be less impulsive. ETFs in taxable with SpecID because they are easier to work with if you want to sell specific lots and they are less likely to spit out capital gains on their own. Vanguard index mutual funds are extremely tax efficient so I'm not worried about one spitting out a capital gain, but under just the right circumstances maybe it can. In that very low probability situation VTI is less likely to spit out a capital gain than VTSAX. It's really splitting hairs, but the costs are almost identical so I'll split the hairs.