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

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

#211

Post by Aloisius »

latchkey wrote: post #191
ch4s3 wrote: post #182

Earlier quoted context omitted.

This is for the same reason they don't mix gold ETFs into their indexes. The point of their funds is to track companies that produce goods and services, not asserts and commodities.

Twist things around however you want, but VGPMX [0] invests in the companies producing precious metals. 1/4 of the portfolio is that. [0] https://investor.vanguard.com/investment-products/mutual-fun...

Vanguard invests in bitcoin companies. They just don't have a dedicated ETF or mutual fund.

For instance, Vanguard is one of the largest institutional investors in MSTR and MARA.

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

#212

Post by jliptzin »

pembrook wrote: post #179
jliptzin wrote: post #122

Earlier quoted context omitted.

There’s not really much money to be made front running someone’s deposit into an index fund that’s gonna sit there for the next 40 years. It works on RH because generally those users are transacting much more frequently and in much less liquid things like options.

Front running customer purchases is not the concern. In the running of an index fund there’s many levers you can pull to create revenue streams that don’t show up on expense ratios. Funny business can absolutely be pulled during rebalancing. Another big one is securities lending income. Vanguard pays that out to investors which effectively creates negative expense ratios in certain funds. Index funds from other issue…

I’m not disputing other funny business, I just don’t think they are making money front running passive index investors.

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

#213

Post by toast0 »

gruez wrote: post #175
toast0 wrote: post #161

Earlier quoted context omitted.

Well, let's not call a short squeeze by another name. Otherwise, I wouldn't call those things front running, as there's no indication of imminent activity. If a material increase in lending rates on a heavily shorted stock was announced, and you bought because you were pretty sure the shorts would be buying to close, that could be front running, yeah. I dunno about market moves based on Elon's role in the culture war…

>Most of the illegal front running is trading ahead of specific trades in response to seeing those orders. Any evidence this is actually happening, rather than something like "this ETF rebalances every quarter, they're unbalanced, and are expected to rebalance in this way", or "this company is probably going to get included in the S&P 500 because it's doing really well"? What makes this sort of "front running" less a…

Here's three SEC press releases that seem to indicate there's evidence of illegal front running:

https://www.sec.gov/newsroom/press-releases/2021-118

https://www.sec.gov/newsroom/press-releases/2021-186

https://www.sec.gov/newsroom/press-releases/2022-228

Trading ahead of index funds when an index change is announced is front running in my book, but it isn't illegal front running; but I don't consider it less acceptable than buying because the graph makes a funny shape.

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

#214

Post by TeaBrain »

TeaBrain wrote: post #107
baking wrote: post #73

Earlier quoted context omitted.

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.

Nevermind, it looks like baking cleared up my misconception in another reply.

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

#215

Post by TeaBrain »

robszumski wrote: post #114
baking wrote: post #109

Earlier quoted context omitted.

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

Ah right

I'd also thought your idea sounded like it made sense, sort of like how a trader can attempt dividend stripping, but looks like the user baking cleared that up.

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

#217

Post by paulpauper »

aantix wrote: post #163

Feels so strange that the average investor can't outperform an index fund with low management fees. A small investor is so agile - they can move in and out of positions. Why that agility can't be utilized to outperform a slow moving index fund, long-term?

Some can. I have done well with leveraged tech funds.

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

#218

Post by neogodless »

wil421 wrote: post #162
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…

At %0.07 you would lose about 2% of your total value after 30 years.[1] No thanks. [1] https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annu...

... of the original value, ignoring growth, dividends, and inflation.

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

#219

Post by v-yanakiev »

aantix wrote: post #163

Feels so strange that the average investor can't outperform an index fund with low management fees. A small investor is so agile - they can move in and out of positions. Why that agility can't be utilized to outperform a slow moving index fund, long-term?

For plausible definitions of "average investor" in this context, it's arithmetically impossible: https://web.stanford.edu/~wfsharpe/art/active/active.htm

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

#220

Post by bluGill »

feoren wrote: post #157
londons_explore wrote: post #32

Earlier quoted context omitted.

But does that structure confer any realistic chance of voting control by any real humans who aren't already employed by vanguard? Funds aren't known for being voting activists.

Would you rather be a dairy cow on a farm owned collectively by the dairy cows, or owned by one billionaire family? Is it that hard to see how that's immediately a huge positive even if you can't identify individual instances of the billionaire abusing their position?

Having seen companies go bust and then the employees discovered their pension was invested in now worthless company stock I oppose all schemes to get people to invest in their own company without having significant control over the direction. (I didn't directly see this - it was before I was born but I meet a relative who worked there for 20 years) Pension laws now do not allow pensions to invest in company stock like that. Everyone I know who has worked for an employee owned company talks about how much $$$ they have in the company now - none have any other retirement plan and I can't help but think how bad they would be hurt if things went wrong.

If you are not Cxx level at a company or at least in a high role with a reasonable shot of getting to a Cxx position in the near future don't put your money in the company you work for. Diversity is important in investing and the company you work for is the least diverse of all investment options since you could lose both your savings and your paycheck at the same time.

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