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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

#61

Post by giantg2 »

Enginerrrd wrote: post #30
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…

We tried using vanguard. The UX/UI was so bad we went through the work of transferring everything to fidelity. They've got a pretty decent app. Vanguard has so much friction on what should be very simple and common tasks. There's no excuse for that. I can say pretty confidently that cutting fees won't be enough. They need a total rewrite of all their customer facing software and web stuff, and they probably need to r…

That's because Vanguard is a buy and hold philosophy. They have previously stated that they designed their site for the bulk of the users. Those users log in just to check their balances in the 5 or fewer funds/ETFs that they hold. So instead of building something that would be reasonably easy for everyone, they built something that was easy for their primary (aging) user base. It's the same sort of mentality how they don't allow inverse ETFs, they aren't going to offer any crypto related stuff, etc.

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

#62

Post by FooBarBizBazz »

arielweisberg wrote: post #4
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…

I started using E-trade because of this instead of transferring my vested stock to Vanguard. Already had an account so it was zero effort to convert to my usual funds as ETFs which has the bonus of being transferable between brokerages unlike mutual funds.

> convert to my usual funds as ETFs

Do you mean that you sold mutual funds at Vanguard, and used the cash to buy ETFs at eTrade? This means you had to pay tax on capital gains, right? Or is there some trick I don't know about, vis-a-vis converting mutual funds into equivalent ETFs, without a taxable event?

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

#63

Post by kasey_junk »

toast0 wrote: post #59
kasey_junk wrote: post #51

Earlier quoted context omitted.

That’s not front running! Front running requires a fiduciary obligation to who you are trading on behalf of.

Investopedia disagrees: > A form of front-running in index funds is common and isn't illegal. > Index funds track a financial index by mirroring the index's portfolio. The composition of the index changes periodically to balance it accurately as the stocks that make it up change dramatically in price or as stocks are added or removed from the index. That forces the fund's managers to buy or sell some components of th…

Then investopedia is wrong. Front running is a very specific thing, a) it requires private information, b) requires trading on behalf of someone and c) requires a fiduciary duty to the person

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

#64

Post by xadhominemx »

benreesman wrote: post #58
kasey_junk wrote: post #45

Earlier quoted context omitted.

PFOF is neither front running nor illegal. If you are curious about a brokers position on PFOF you can look up their disclosures. SEC Rule 605, 606 and 615 are the search terms you want when looking these up. Fidelity has a similar disclosure on this as Vsnguard, which is that they don’t engage in PFOF except for some options markets. Robinhood got in trouble for false advertising about PFOF not because they engaged…

PFOF isn't (typically) illegal, a better word might be "controversial". There's nothing free in this life: the zero commission brokers are making it up somehow. While the studies on how PFOF effects execution quality are varied, this summary [1] from Wharton seems fairly balanced. It's not as simple as citing NBBO and moving on. Personally I'm suspicious of the practice mostly because of the pretty clear conflicts of…

Robinhood makes the majority of their revenue on options and crypto. Vanilla equities is becoming less important.

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

#65

Post by giantg2 »

jhardy54 wrote: post #38
angry_moose wrote: post #29

Earlier quoted context omitted.

You can. There's usually a hefty transaction fee when purchasing a funds not managed by whichever service you're on ($49?). Might be manageable if you're purchasing in enormous quantities; but a 5% fee on $1000 hurts if you're in normal consumer purchase ranges.

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.

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

#66

Post by giantg2 »

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 wonder what the tax efficiency looks like when comparing a zero fee fund to its low fee ETF counterpart. Is it possible an ETF under 5 or even 10 basis points is still a better deal if it's tax efficient (taxable accounts only)?

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

#67

Post by bityard »

latchkey wrote: post #39

Let's not forget that Vanguard has taken a strong stance against crypto [0]. Claiming to significantly invest in technology while deliberately ignoring the latest advancements in financial technology, seems contradictory. If their business was doing so well, they wouldn't have to lower fees. [0] https://news.ycombinator.com/item?id=42832026

There is a difference between investment and speculation and lots of people learn it the hard way, eventually.

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

#68

Post by icelancer »

whitepoplar wrote: post #23
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…

Fidelity's "Zero" funds are great, but only for specific scenarios IMO. They can't be held outside Fidelity accounts, so what happens if you get caught up in some KYC nonsense and Fidelity closes your account? Are you forced to liquidate and incur capital gains? There are also some embedded tax efficiencies inherent to ETFs, like 351 exchanges, which aren't popular now, but may become popular in the future. TBH, this…

> They can't be held outside Fidelity accounts, so what happens if you get caught up in some KYC nonsense and Fidelity closes your account?

This literally happened to me. I'm banned from Fidelity for some unknown (AML presumably) reason but have no other issues with any brokerage, bank, or exchange.

Fortunately I just held a bunch of ETFs, so it was straightforward. But it does happen.

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

#69

Post by toast0 »

Enginerrrd wrote: post #30
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…

We tried using vanguard. The UX/UI was so bad we went through the work of transferring everything to fidelity. They've got a pretty decent app. Vanguard has so much friction on what should be very simple and common tasks. There's no excuse for that. I can say pretty confidently that cutting fees won't be enough. They need a total rewrite of all their customer facing software and web stuff, and they probably need to r…

> They need a total rewrite of all their customer facing software and web stuff,

They've done that. And now you can't sort by capital gain/loss per share when picking lots to sell.

They're also almost done forcing everyone into the brokerage side, which is less flexible with some things like reinvestment of dividends. On the nice side, it includes foreign dividend info on the 1099s so you don't have to find a separate document to get those percentages.

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

#70

Post by recursive »

latchkey wrote: post #39

Let's not forget that Vanguard has taken a strong stance against crypto [0]. Claiming to significantly invest in technology while deliberately ignoring the latest advancements in financial technology, seems contradictory. If their business was doing so well, they wouldn't have to lower fees. [0] https://news.ycombinator.com/item?id=42832026

And now I trust Vanguard just a little more.
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