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Vanguard's average fee is now 0.07% after biggest-ever cut

bloomberg.com

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Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#101

Post by bombcar »

ak217 wrote: post #88
baking wrote: post #79

Earlier quoted context omitted.

It's really annoying that people here are talking about "Zero" fee funds as if they were zero-fee funds. As far as I can tell "Zero" means less than 0.05% fees.

No, zero means a 0% expense ratio and no minimums, as listed for the four funds at the top of https://www.fidelity.com/mutual-funds/investing-ideas/index-... . Unlike most other funds, these are captive to Fidelity so if you ever do an ACATS transfer they have to be liquidated.

That's the key, though if it's a tax-advantaged account it's not a major issue (as you can just transfer to an appropriate ETF and then ACATS that).

In taxable it could cause you to have to stay with Fidelity or eat a tax bill.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#102

Post by bombcar »

giantg2 wrote: post #65
jhardy54 wrote: post #38

Earlier quoted context omitted.

This is true for mutual funds, but Vanguard ETFs are available on Fidelity with no fees.

And ETFs are generally more tax efficient anyways. I'm not sure what the benefit to funds are.

There are some minor advantages to funds left, especially in taxable. Some of the funds do their best to allocate certain costs to the ETFs so that ends up more favorable tax-wise.

The real main advantage of funds vs ETFs is they don't bounce around in price every millisecond.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#103

Post by greyface- »

greenavocado wrote: post #99
turnsout wrote: post #78

Earlier quoted context omitted.

Agreed—this strengthens my feelings about the brand. And I write this as someone who also holds (a tiny amount of) crypto

Vanguard won't let you trade anything even tangentially related to crypto FYI

Not true. I own a few shares of MSTR in my Vanguard brokerage account.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#104

Post by frognumber »

I'll be contrarian. The general wisdom is hold the fund with the lowest fee structure.

However, if the fee structure is 0.07%, that's $70/year / 100k invested. Even if it's 0.44%, you're talking about $440.

The fees on most funds are small enough now to not matter much. It's worth shopping for lower-fee funds, but the more you go below 0.5%, the less it matters. If I save $500 per year for 50 years, that's $25k+interest, which is kind of the breakpoint of where it has practical impact on e.g. when I can retire.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#105

Post by yieldcrv »

ilamont wrote: post #3

Not mentioned in any of the coverage I've seen (or the interview with Vanguard's new CEO in the WSJ) is Fidelity. Fidelity used to be known for actively managed funds, but has been eating Vanguard's indexing lunch for the past 10 years or so. Part of this relates to its dominance in workplace accounts, but Vanguard hasn't helped itself with some bad customer-facing software updates and a perception that its service l…

and Vanguard keeps fading the crypto vote, and Fidelity is the exact opposite

everyone can vote with their wallet

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#106

Post by selykg »

jhardy54 wrote: post #37
ilamont wrote: post #3

Not mentioned in any of the coverage I've seen (or the interview with Vanguard's new CEO in the WSJ) is Fidelity. Fidelity used to be known for actively managed funds, but has been eating Vanguard's indexing lunch for the past 10 years or so. Part of this relates to its dominance in workplace accounts, but Vanguard hasn't helped itself with some bad customer-facing software updates and a perception that its service l…

RE: Fidelity Zero The downside, as I understand it, is that Fidelity Zero doesn’t offer ETFs, and that the Fidelity Zero mutual funds can’t be transferred to other brokerages. Depending on your preferences their expense ratios might justify the vendor lock-in, but Vanguard ETFs are hard to beat IMO.

I tend to only use the zero funds in tax advantaged accounts. Primary example, I needed to move an HSA to avoid a $20/month fee from the idiots at Health Equity when I switched jobs. Moved it immediately to Fidelity since they offer an HSA account and used the zero funds.

If I were to ever need to move the HSA money elsewhere, they can sell the funds to transfer, since it's not a taxable event, that's fine by me.

I won't buy the zero funds for my brokerage account though, I stick with Vanguard ETFs.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#107

Post by TeaBrain »

baking wrote: post #73
robszumski wrote: post #54

Earlier quoted context omitted.

The zero fund I am familiar with (FZILX) has a once-a-year dividend schedule which I'm sure nets them a lot of money, vs paying out more frequently. If you want to unload, you can only do it once a year without throwing away your earned dividend.

That's not how dividends work.

They raise a good point, which I've never considered before. This could be considered a form of dividend arbitrage based on the difference in scheduling between the component dividends vs the fund dividends, based on the knowledge that a non-zero amount of fund holders will exit the fund before the once a year dividend date, but not before the fund earned dividends based on the fund components.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#108

Post by latchkey »

greyface- wrote: post #103
greenavocado wrote: post #99

Earlier quoted context omitted.

Vanguard won't let you trade anything even tangentially related to crypto FYI

Not true. I own a few shares of MSTR in my Vanguard brokerage account.

Good choice, one of my best investments ever. Get to 100 shares and sell some covered calls.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#109

Post by baking »

robszumski wrote: post #91
baking wrote: post #73

Earlier quoted context omitted.

That's not how dividends work.

You have to hold the fund on the ex-dividend date... Pays out once in Dec. If you buy in Feb and sell in Oct, you're not getting your dividend although you earned most of it... If you had VTI, you'd get 3 of them.

Dividends are built into the NAV price. It just becomes taxable income when it is paid out.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#110

Post by guntars »

frognumber wrote: post #104

I'll be contrarian. The general wisdom is hold the fund with the lowest fee structure. However, if the fee structure is 0.07%, that's $70/year / 100k invested. Even if it's 0.44%, you're talking about $440. The fees on most funds are small enough now to not matter much. It's worth shopping for lower-fee funds, but the more you go below 0.5%, the less it matters. If I save $500 per year for 50 years, that's $25k+inter…

With 7% interest it’s over 200k.
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