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Should I convert my Vanguard Admiral Shares to ETFs?

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  • Avatar PeterParker 
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    It appears that Vanguard ETFs are now cheaper than their admiral shares.  From my understanding, you can convert mutual funds to their equivalent ETF on a tax-free basis even in a taxable account.  As such, I was thinking of converting my VTSAX to VTI and VTIAX to VXUS.  Is there any downside in doing so?

    #213228 Reply
    Avatar jacoavlu 
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    I’m curious, how much would you save in expenses over the course of the year by doing so?

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    #213239 Reply
    Avatar Peds 
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    The difference is inconsequential.
    Do you want to deal with ETFs?

    #213241 Reply
    Avatar PeterParker 
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    It wouldn’t save much over the course of a year by any means but it didn’t seem like there was any real downside.  What are the issues with dealing with ETFs?

    #213242 Reply
    Avatar Peds 
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    Avatar jacoavlu 
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    #213253 Reply
    Avatar jz 
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    The bulk of boglehead info on ETF vrs. mf is dated.   ETFs are more tax efficient.

    #213255 Reply
    Avatar Peds 
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    What is dated exactly?
    Yes ETFs are more tax efficient.

    #213264 Reply
    Avatar jacoavlu 
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    ETFs are more tax efficient.

    Click to expand…

    generally, yes, but more specifically with Vanguard, the differences are minimal to nil

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #213270 Reply
    Avatar southernerdoc 
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    At least with mutual funds, you don’t have the price swing of speculation.

    #213299 Reply
    CordMcNally CordMcNally 
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    I wouldn’t switch them with Vanguard. For Vanguard, mutual funds and ETFs are basically the same from a tax standpoint. I suspect other brokerages will follow suit when their patent expires. It looks like for VTSAX vs. VTI you’re looking at .04% vs. .03% while VTIAX vs. VXUS is .11% vs. .09%. At some point you run up against the law of diminishing returns and this situation wouldn’t make me change just for the sake of changing.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #213300 Reply
    Avatar FIREshrink 
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    MFs are nicer for investing specific dollar amounts. With ETFs you always end up with a few bucks leftover.

    #213336 Reply
    Liked by pulmdoc, Craigy
    Avatar jacoavlu 
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    One downside is more complexity. The transaction history sure looks more complex and confusing after the conversion. I’ve done this. When I thought I was going to transfer a holding away from Vanguard. Couldn’t transfer admiral shares of mutual funds. But could transfer ETF shares. Never did end up transferring out. Eventually liquidated. But it was harder later on to figure out if the basis and gains figures were correct on my 1099. I’d have to look back at statements to be more specific. But it was confusing. It would have been simple had I not made the MF to ETF conversion. Brokerages, Vanguard included, can and do make mistakes.

    The real question for the OP should be, what’s the real upside?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #213341 Reply
    Liked by Tim
    Craigy Craigy 
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    FWIW, most of my vanguard holdings are ETFs.  Only exceptions are 401ks and money market funds.

    I have considered switching to admiral shares a few times but thusfar I see no downside to the ETFs, or at least not enough to get me to move from one to the other.

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    #213533 Reply
    Craigy Craigy 
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    MFs are nicer for investing specific dollar amounts. With ETFs you always end up with a few bucks leftover.

    Click to expand…

    That’s the thing.  Easier to rebalance.  Easier for perfectionists.

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    #213534 Reply

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