[HN Gopher] Vanguard's average fee is now 0.07% after biggest-ev...
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Vanguard's average fee is now 0.07% after biggest-ever cut
Author : cantaloupe
Score : 285 points
Date : 2025-02-04 15:11 UTC (7 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| cantaloupe wrote:
| https://archive.is/jigpT
| ilamont wrote:
| 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 levels are
| poor compared to Fidelity.
|
| Cutting fees helps, but Fidelity has shown its willing to do
| this, too, including no fee "Zero" index funds:
| https://www.fidelity.com/mutual-funds/investing-ideas/index-...
| (note Fidelity is very clear about who it's competing with)
| arielweisberg wrote:
| 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.
| kasey_junk wrote:
| You can frequently do in kind transfers of mutual funds,
| particularly between the big funds and brokers.
| FooBarBizBazz wrote:
| > 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?
| toast0 wrote:
| Many Vanguard mutual funds offer ETF as a share class of
| the fund. For those funds, shares in the traditional share
| classes can be exchanged for ETF shares, if you hold them
| at Vanguard.
|
| But not all of the funds have an ETF share class. And if
| you hold Vanguard mutual funds elsewhere, you'd need to
| transfer them in-kind to Vanguard to convert.
| arielweisberg wrote:
| The funds come from selling stock as it vests. Stuff
| already in Vanguard stays there until I feel annoyed enough
| to move it.
| tommiegannert wrote:
| Isn't this about the funds, rather than using Vanguard as a
| broker? Can't you buy Vanguard funds while on Fidelity, or vice
| versa?
| angry_moose wrote:
| 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.
| jhardy54 wrote:
| This is true for mutual funds, but Vanguard ETFs are
| available on Fidelity with no fees.
| giantg2 wrote:
| And ETFs are generally more tax efficient anyways. I'm
| not sure what the benefit to funds are.
| matthewbauer wrote:
| It used to be you could buy fractions of a mutual fund,
| but not ETFs. Recently, brokerages have started allowed
| you to do fractional ETFs as well though.
| bombcar wrote:
| 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.
| everfree wrote:
| Just because mutual funds are priced and traded daily
| doesn't mean their market value isn't still bouncing
| around every millisecond.
| wing-_-nuts wrote:
| TBH, I trust vanguard more, even if their website is absolutely
| worse. There's a saying, 'if you're not the customer, you're
| the product'. I expect trades on those index funds are getting
| 'front run' much like robinhood is getting front run. You might
| have a lower ER but your nav might effectively be higher when
| buying and lower when selling.
|
| Of course, I'm a 'buy and hold' investor so this doesn't really
| effect me much, but it's the principle of the matter.
| kasey_junk wrote:
| Front running is illegal.
| op00to wrote:
| Only if you get caught. And the fine needs to be higher
| than the profit.
| xadhominemx wrote:
| It's pretty easy to learn how fidelity and others make
| money on fee-free index funds. Perhaps something to look
| into before accusing them of committing a crime.
| zelon88 wrote:
| Considering someone or some activity to be criminal, and
| accusing them of being a criminal, are two completely
| different things.
|
| I consider most financial institutions to be criminal
| because it is always their clear intention to circumvent
| the _spirit_ of the law as closely as possible. The
| intention is to reap the benefits of breaking the law,
| without the risk of consequence. When the pitchforks
| come, these are going to be the criminals being chased
| down the street.
|
| By the same token, I do not consider a parent who writes
| a bad check for groceries to be a criminal.
| xadhominemx wrote:
| PFOF does not violate the spirit of the law
| Dylan16807 wrote:
| The client generally saves money in the PFOF situation.
| They benefit, their broker benefits, and the market maker
| they deal with benefits. The only loser is the abstract
| rest of the market being able to get fewer penny
| shavings.
|
| What in particular do you see as against the spirit of
| the law?
| edmundsauto wrote:
| I think the fine needs to be higher than the profit
| difference between the (illegal) and not illegal option.
|
| If you have a legal route to $1M and an illegal route to
| $1.5M, the rational calculation for fines is against the
| $0.5M delta, not the full amount.
| recursive wrote:
| Only if they're mutually exclusive.
| nothercastle wrote:
| The illegal 1.5 is always the optimal game theory choice
| because the chance of getting caught is not 100%
| BobaFloutist wrote:
| To use an absurd example just to make it incredibly
| obvious why what you said doesn't make sense, would that
| hold up if the fine if caught was $10 trillion dollars?
| nothercastle wrote:
| Then shareholders would demand executives have skin in
| the game and suffer if a company got the death penalty
| like you describe. Would likely lead to a much better
| world. Golden parachutes would not be a thing if
| shareholders got liquidated like that.
| NickC25 wrote:
| In finance, nothing is illegal if the profits outweigh the
| fines.
|
| Citaldel paid handsomely for order-flow information from
| Robinhood. They made a lot of money off retail traders.
| They paid a fine IIRC equivalent to a few day's profits.
| kasey_junk wrote:
| 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 in it, because again, PFOF is
| not front running and not illegal.
| benreesman wrote:
| 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 interest that it
| creates. Again, this is controversial, but the people
| arguing it's ok are for the most part making money from
| it.
|
| [1]
| https://wifpr.wharton.upenn.edu/uncategorized/research-
| spotl...
| xadhominemx wrote:
| Robinhood makes the majority of their revenue on options
| and crypto. Vanilla equities is becoming less important.
| loeg wrote:
| The zero commission brokers typically make most of their
| revenue on net interest margin. PFOF is a smaller
| portion.
| Scoundreller wrote:
| securities lending doesn't hurt if your clientele likes
| heavy short-interest-worthy meme stocks
| seabird wrote:
| PFOF is not front running. Market making is not front
| running. Full stop. This fact is only controversial if
| you fundamentally misunderstand what market makers do.
| SteveNuts wrote:
| Isn't it just PFOF? Is that actually illegal?
|
| Edit: No, it's not in the US at least. It mostly just
| allows the broker to internalize orders if they prefer.
| NegativeLatency wrote:
| The riskier the road, the greater the profit.
| yellowstuff wrote:
| There's a lot of confused comments on this thread. "Front
| running" in the strictest sense means illegal trading that
| involves taking advantage of trades that you know will
| happen and you have a responsibility not to exploit. "Front
| running" is also used informally to mean legally trading
| prior to trades that you anticipate happening. Studying the
| rules of an index and buy a stock just before its added to
| the index and index funds are required to buy it is "front
| running" in the second sense.
| 2OEH8eoCRo0 wrote:
| How do you front run a mutual fund? The price is the price.
| manojlds wrote:
| You mean an index fund?
| 2OEH8eoCRo0 wrote:
| An index fund is a type of mutual fund
| manojlds wrote:
| Yeah but you can front run a (active) mutual fund
| lotsofpulp wrote:
| Wouldn't index ETFs be index funds that are not mutual
| funds?
| 2OEH8eoCRo0 wrote:
| Yes and they trade during market hours the same as stocks
| so I understand front running those trades.
| toast0 wrote:
| Predict or react to index changes faster than the funds
| that are compelled to follow the index.
|
| But you can't front run shares of mutual funds; they always
| trade at close of business at NAV.
|
| You could potentially front run ETFs, but if you're worried
| about that, you can use limit orders and get the price you
| want or not transact. As long as you use a competent broker
| that offers limit orders.
| kasey_junk wrote:
| That's not front running! Front running requires a
| fiduciary obligation to who you are trading on behalf of.
| toast0 wrote:
| 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 the index.
|
| https://www.investopedia.com/terms/f/frontrunning.asp
| kasey_junk wrote:
| 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
| gruez wrote:
| If we use that expansive definition of "front running",
| is it "front running" if I buy stocks trying to squeeze
| short sellers? What about if I thought people would
| buy/sell telsa stocks because of musk's role in the
| culture wars, and tried to get ahead of that? Is "front
| running" just buying low and selling high?
| toast0 wrote:
| 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 wars, but maybe if he did something in
| particular.
|
| In general, buy on the rumor, sell on the news could
| qualify as front running under this definition, but I
| think I'd want to narrow it a bit to working to trade
| ahead of perceived imminent and definite trades. Most of
| the illegal front running is trading ahead of specific
| trades in response to seeing those orders.
| gruez wrote:
| >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 acceptable than
| buying because "I like the stock", or trading on
| technical analysis?
| toast0 wrote:
| 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.
| gruez wrote:
| All 3 examples you provided are for people trading on
| material nonpublic information. In other words, some guy
| working at an asset manger knew they were going to
| execute trades on behalf of a client, and then made his
| own trade ahead of that. That's textbook front running,
| no denying it, but that's not anywhere close to what's
| happening with "ETF rebalancing" or PFOF. It's perfectly
| legal, for instance to speculate on whether TSLA or
| whatever is going to make it into the S&P 500 and "front
| run" that. It's also not clear why such trades would be
| immoral or unfair.
|
| >https://www.sec.gov/newsroom/press-releases/2021-118
|
| >Wygovsky repeatedly traded in his family members'
| accounts held at brokerage firms in the United States
| ahead of large trades that were executed on the same days
| in the accounts of his employer's advisory clients.
|
| >https://www.sec.gov/newsroom/press-releases/2021-186
|
| >Polevikov had access to real-time, non-public
| information about the size and timing of his employers'
| securities orders and trades, and used that information
| to secretly trade on, and ahead of, his employers'
| trades.
|
| >https://www.sec.gov/newsroom/press-releases/2022-228
|
| >Billimek would inform Williams of the asset management
| firm's market-moving trades prior to their execution
| toast0 wrote:
| > but that's not anywhere close to what's happening with
| "ETF rebalancing" or PFOF. It's perfectly legal, for
| instance to speculate on whether TSLA or whatever is
| going to make it into the S&P 500 and "front run" that.
| It's also not clear why such trades would be immoral or
| unfair.
|
| I never said trading a stock ahead of it being added or
| removed to the S&P 500, or between the announcement of it
| being added or removed and index funds actually
| purchasing it is illegal, immoral, or unfair, or less
| acceptable than any other trade.
|
| Just that it's front running. And then you asked if there
| were examples of illegal front running, so I provided
| those --- which aren't examples of trading ahead of index
| funds, because trading ahead of index funds isn't
| illegal.
|
| I'm not really sure what you're asking at this point.
| short_sells_poo wrote:
| If you know the index rules, it's fairly simple to
| calculate the turnover it is going to generate when it
| rebalances and subsequently the impact the rebalance is
| going to have on prices. This is a fairly well known
| behavior and a lot of players have been doing this for a
| long time. Basically every index of any significance is
| already being monitored and rebalancing effects are "front-
| run" this way.
|
| I put the word in quotes, because this is a perfectly
| legitimate way of front running. The major indices are all
| public, and anyone can take a crack at this. In other
| words, if I announce to the world a month in advance that
| on a specific day and a very specific time of the day (at
| the closing auction) I'm going to buy X amount of specific
| stocks and sell Y amount in other stocks, I can't blame
| people for using that information against me.
| loeg wrote:
| This is not what "front running" means.
| short_sells_poo wrote:
| Yeah duh. I was explaining to the parent.
| bombcar wrote:
| Fidelity uses those funds as marketing, and they make up for
| it with all the other services and funds they offer. It's
| intentional, and it's working.
|
| Vanguard is more and more becoming a group that just wants to
| run ETFs and if you want to _use_ them, they 're making it
| harder and harder. They recently dumped all their 401(k) and
| similar plans from being in-house to some other provider.
|
| Saves costs, makes support annoying.
|
| Of course, you can use a Fidelity account to own Vanguard
| ETFs if you wanted.
| matthewaveryusa wrote:
| >Of course, you can use a Fidelity account to own Vanguard
| ETFs if you wanted.
|
| Which I would highly recommend if you ever want to change
| brokers. the fidelity ZERO products are great but can only
| be held at fidelity while VOO shares can be transfered to
| any broker.
| robocat wrote:
| I presume the main advantage of transferring shares is to
| avoid taxation on realised gains. Secondary is to avoid
| transaction fees?
|
| I sold and bought recently (because transfer looked like
| paperwork hassle to me): had a small transaction cost,
| and the main disbenefit was losing transaction history
| e.g. buy date was now reset; it was tax neutral for me
| either way.
| skeuomorphism wrote:
| > Fidelity uses those funds as marketing, and they make up
| for it with all the other services and funds they offer.
| It's intentional, and it's working.
|
| > Vanguard is more and more becoming a group that just
| wants to run ETFs and if you want to use them, they're
| making it harder and harder. They recently dumped all their
| 401(k) and similar plans from being in-house to some other
| provider.
|
| If this is true, then it must for individuals.. My company
| moved a little over a year ago TO vanguard for 401ks
| sgerenser wrote:
| It was only for solo 401ks and small business with less
| than $20M in assets.
| wbl wrote:
| Vanguard is still offering IRAs last I checked.
| phil21 wrote:
| It's not clear to me exactly what they have moved, but
| two of my (very old) Simple IRA accounts got forcefully
| moved without my approval, and a 401k rollover into a
| self-managed IRA is still around. Not sure what the
| difference was exactly.
|
| https://www.ascensus.com/about-us/press-
| room/news/ascensus-t...
|
| This post was a reminder to get those moved out of
| Ascensus into Fidelity if possible.
| phil21 wrote:
| Thanks for the reminder to move some old IRA accounts they
| dumped onto some random provider to Fidelity.
|
| Horrible move on their part, if I didn't want some provider
| diversification I'd just move everything over entirely at
| this point.
| fallingknife wrote:
| The pennies that they scalp off you on the trade by "front
| running" the order is much less cost than the annual fee if
| you are a long term investor.
| jliptzin wrote:
| 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.
| pembrook wrote:
| 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
| issuers don't necessarily share that securities lending
| income with customers.
| jliptzin wrote:
| I'm not disputing other funny business, I just don't
| think they are making money front running passive index
| investors.
| ilya_m wrote:
| It's not about front-running investments _in_ passive
| index funds, it's about front-running investments _by_
| passive index funds, which, of course, ultimately comes
| out of the investors' wallets.
|
| As a practical matter, since dealing in mutual funds'
| shares is settled after market, "front running" these
| transactions would be problematic. (Impossible, I'd say?)
| ardit33 wrote:
| I trust Fidelity. I used to work there years ago. It is a
| conservatively run place, careful with changes, which is a
| good thing when managing large amount of money. The tech and
| web interface might not be the shiniest, but I'd rather have
| my money there than vanguard/schwab, etc...
| Animats wrote:
| I trusted Vanguard more until they became a broker and forced
| all their fund customers to have a brokerage account with
| them.
| losvedir wrote:
| You expect wrong. I think you're talking about Payment for
| Order Flow (PFOF) which Fidelity does not use.[0]
|
| [0] https://www.fidelity.com/trading/execution-
| quality/overview
| Gshaheen wrote:
| One other differentiation that Vanguard has is that it is owned
| by the fund holders
|
| "Vanguard set out in 1975 under a radical ownership structure.
| Our company is owned by its funds, which in turn are owned by
| Vanguard's fund shareholders. We focus on meeting the
| investment needs of our clients."
|
| So in short, vanguard is customer-owned, where fidelity is
| owned by mostly the founding family (the Johnson's).
|
| https://corporate.vanguard.com/content/corporatesite/us/en/c...
| londons_explore wrote:
| 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.
| ElevenLathe wrote:
| Even so, I think the incentives are still for the Vanguard
| management to make as little profit as possible so that
| they can compete and have more funds under management.
| Controlling more billions of dollars of stock shares is
| kind of its own reward and brings many opportunities for
| enrichment, and if they don't have to worry about making
| money for shareholders, they can pretty much always
| engineer the lowest fees.
| giantg2 wrote:
| Yes, in theory the fund-owned structure should mean they
| can charge lower fees than profit driven competitors.
| However, if competitors are doing things like zero fee
| funds as loss leaders, or have a banking side to diffuse
| costs, then it gets less clear.
| anonymousDan wrote:
| This kind of thing makes me nervous. What kind of
| opportunities? Can they somehow loan out shares for
| example?
| feoren wrote:
| 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?
| jazzyjackson wrote:
| Bad analogy. There are many dimensions in which my
| experience as a dairy cow may be affected by ownership.
|
| In the case of an investment fund, there's really just
| customer service and rate of return. If I have a good
| experience in those dimensions, why should I be concerned
| with ownership structure?
| bluGill wrote:
| 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.
| ghaff wrote:
| Agreed. If you feel that your company is a good forward-
| looking investment for whatever reason
| (appreciation/dividends), it doesn't hurt to keep some
| holdings--from RSUs or otherwise. Though with transaction
| costs what they are somewhat per this article/discussion,
| the right question should probably be "If I had the money
| in cash, would I buy these shares." Employee stock
| purchase makes things a bit more complicated depending on
| the exact terms. Post dot-bomb I got a lot more
| conservative in terms of holding company stock from
| RSU/ESPP after a decade with a couple of private firms
| which doubtless cost me some money but I think I took a
| reasonable approach overall.
| Gshaheen wrote:
| Starting end of Nov 2024, Vanguard is actually beginning to
| roll out proxy voting capabilities to fund holders (in the
| US). This looks to be the beginning of deeper proxy voting
| capabilities, but not much information out there yet.
|
| https://corporate.vanguard.com/content/corporatesite/us/en/
| c...
| fallingknife wrote:
| This is academic. I have equal control over both, which is to
| say none whatsoever. Capacity to influence a company falls to
| the following (in order)
|
| 1. Executives
|
| 2. Large shareholders (usually institutional and rarely
| individuals)
|
| 3. Customers
|
| 4. Employee unions (if present)
|
| The tech industry is an anomaly where 1 and 2 largely
| overlap, but this is not true in most industries. Unless you
| are super rich, you will never be able to have more influence
| over a large company than you do in the role of a pissed off
| customer ready to take his money elsewhere.
| richid wrote:
| This alone is why I will always choose Vanguard if possible.
| yesimahuman wrote:
| I don't think vanguard's core customer base cares about what
| hungry competitors are doing to entice them to move. Just look
| at Robinhood: they offered the biggest financial incentive for
| users to switch of any broker in the industry and I doubt many
| vanguard customers took them up on that. Stability, trust, and
| low fees are all buy and hold investors at Vanguard really care
| about.
| nothercastle wrote:
| They only offered it for a month or 2 and pulled it pretty
| quick
| whitepoplar wrote:
| 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
| mainly applies to taxable accounts. For nontaxable accounts,
| Zero funds don't have much downside.
| robszumski wrote:
| 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.
| baking wrote:
| That's not how dividends work.
| robszumski wrote:
| 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.
| baking wrote:
| Dividends are built into the NAV price. It just becomes
| taxable income when it is paid out.
| robszumski wrote:
| Ah right
| TeaBrain wrote:
| 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.
| TeaBrain wrote:
| 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.
| TeaBrain wrote:
| Nevermind, it looks like baking cleared up my
| misconception in another reply.
| icelancer wrote:
| > 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.
| nfriedly wrote:
| I have accounts at both, and my perception is that Vanguard is
| pretty much exclusively low cost, but Fidelity does have some
| very competitive options if you can find them. They just also
| have a lot of overpriced junk.
|
| Fidelity's technology and customer service does generally seem
| better. Although they were completely baffled when their app
| refused to run on a rooted phone with an error message along
| the lines of "your account is frozen" after I logged in. (It
| wasn't, and worked fine after I realized that was the issue and
| put it on the deny list.)
|
| Overall, I trust Vanguard more, but both have their strong
| points.
| datavirtue wrote:
| The overpriced junk is wedged into bespoke employer 401k
| programs that are managed by the brokers. There is usually
| only one or two low fee options hiding in the list and you
| have to be savvy to find them. Most employer 401k programs
| suck because they (custodian) are agreeing to the fund
| composition based on price to them. If you are lucky you
| might not end up in John Hancock or Transamerica. Yuck!
| Enginerrrd wrote:
| 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 revamp their customers service as well. They screwed up
| my wife's name and she tried for months and months to fix it
| before giving up.
| ryandrake wrote:
| Vanguard recently made two horrible mistakes: 1. a typical
| "Grand UI Redesign" that made the site worse and removed a
| bunch of previously working features, and 2. They made all
| their users "migrate" their accounts from one type to
| another, a process that I found to be error prone and clunky.
|
| For 1, all of us software people have seen companies do this
| over and over, and it always sucks. For 2, why they couldn't
| do whatever backend migration they needed to do without
| having it disrupting retail customers, I have no idea.
|
| Both of those point to a software organization way below
| where it needs to be competence-wise.
| ecshafer wrote:
| Vanguard's grand UI redesign was poorly done. At the time
| each team was responsible for some software product, and
| had a good ownership model. The issue imo was that the
| internal UI component library was poorly made and funded,
| and that the UX team was very old (most of the people were
| lifers that were hired in the 90s, no real experience in
| UI/UX,etc.) So people were just making the designs they
| were given. The Grand UI Redesign was a single new team
| that just made a heavy Angular UI application for the major
| areas, forcing product teams to be backend only. This
| caused discontinuity and didn't really fix the core issue.
| giantg2 wrote:
| 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.
| dcrazy wrote:
| At some point you need to realize your gains--perhaps to
| rebalance a portfolio, or to pay for an expense, or because
| you're retiring and now it's time to enjoy the profits of
| your buying and holding. And a lot of people elect
| specific-lot cost basis accounting to minimize tax burden.
| giantg2 wrote:
| Supposedly they have a tax loss harvesting and "min tax"
| tool for that.
| dcrazy wrote:
| The "tool" was sorting your lots by cost basis, which is
| what Enginerrrd is saying was taken away.
| giantg2 wrote:
| I would guess it's still there but buried in some UX hell
| hole
| toast0 wrote:
| I did some rebalancing recently, and couldn't find it.
| You can sort by capital gain per lot, which isn't very
| helpful if your lots are vastly different sizes.
| Thankfully I don't have that many lots, and had plenty of
| capital loss carryover to offset the gains, so it doesn't
| matter _that_ much, but it 's annoying, and it's probably
| the straw that's going to get me to actually move to a
| better brokerage. (which I guess is fine for Vanguard, if
| I'm at a different brokerage, it reduces Vanguard's
| costs)
| lupire wrote:
| They can't even correctly donate from a Vanguard brokerage
| account to a Vanguard DAF without breaking the cost basis.
| toast0 wrote:
| > 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.
| nineplay wrote:
| The idea of making financial decisions based on UI/UX is
| extraordinary to me.
| Enginerrrd wrote:
| It is to me too! I would never do that normally. It's just
| that it was THAT bad.
|
| It took me MONTHS to figure out how to sell a particular
| fund to buy another one. Somehow every time I tried to do
| it, it failed. I kept coming back to it over and over and
| different things went wrong. It was also very difficult to
| figure out the status of an order.
|
| It was literally that clunky, and I've been trading for
| decades. I run multiple businesses, I know how these things
| work, but their UI was awful.
| nineplay wrote:
| Twice I've been unsure how to move move money with their
| site and twice I've contacted their customer service
| center who was more than happy to guide me through the
| process.
| sjf wrote:
| I guess you've never had the displeasure of using
| treasurydirect.gov.
| Arrowmaster wrote:
| It's slightly better now. I think they removed the
| onscreen keyboard and finally let you type your password
| directly.
|
| But it's still bad.
| dmoy wrote:
| Do you like radio buttons? I hope you like radio buttons.
|
| Even if the thing that you're using for really, really
| shouldn't be a radio button.
| JasserInicide wrote:
| It's so bad. I don't even like logging in anymore.
| Padding/whitespace everywhere, no more alternating row
| colors. I despise mobile-first UIs. The old one many have
| looked dated but it was more information dense without being
| overwhelming.
| programmertote wrote:
| Vanguard's website revamp in the past three years was
| disappointing because in the past, I can visit just one
| (landing) page and get almost all of the info I need about my
| holdings + actions I could take on them and my accounts. Now,
| I have to click through a myriad of pages to do what I want.
| Plus, in Firefox browser at least, if you want to 'Exit' the
| order and some other pages, it simply doesn't work, so I have
| to type the 'vanguard.com' in the browser's URL field and
| ping it again.
|
| This is an example of not breaking what was not broken (or at
| least, keep most of what was useful instead of replacing
| everything with "new and cool" stuff just because <no
| reason?>).
| xhkkffbf wrote:
| I'm waiting for negative fee funds that delivers better than
| indexed returns by loaning out the shares to shorts.
| toast0 wrote:
| Many funds do make revenue with share lending. I don't know
| that there's enough lending to get expenses below zero, at
| least as of yet, though.
|
| Also, sometimes the lending revenue is just added to the
| fund, rather than being used to offset expenses. The end
| result is the same, but the accounting numbers look
| different.
|
| As a result, when comparing two index funds that track the
| same index, you should look at actual total returns rather
| than quoted expense ratios.
| jhardy54 wrote:
| 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.
| giantg2 wrote:
| 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)?
| selykg wrote:
| 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.
| baking wrote:
| 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.
| ak217 wrote:
| 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.
| bombcar wrote:
| 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.
| ak217 wrote:
| It's an interesting reversal and highlights the power of
| competition - as a young part-time employee in college,
| my employer automatically contributed a few hundred
| dollars for me to a 403(b) type of retirement savings
| account. Fidelity was the custodian and after I left the
| job, it imposed a substantial monthly fee that eventually
| ate all of the money in the account, leaving me with
| zero. I always remember that episode when dealing with
| Fidelity.
| yieldcrv wrote:
| and Vanguard keeps fading the crypto vote, and Fidelity is the
| exact opposite
|
| everyone can vote with their wallet
| nothercastle wrote:
| It's hard to beat Fidelitys offer right now. They give you a
| 2-3% checking account. A 2% cash back credit card, access to
| their low cost funds and a decent enough website. All in one
| place.
|
| Other brokerages are better at their niche but the fidelity
| package is quite competitive
| silisili wrote:
| Fidelity has great features, but is hamstrung by their awful
| execution.
|
| The app is clunky, slow, and looks like something from the
| 90s. Just logging in takes an average of 10-15 seconds. The
| credit card is serviced by Elan, who is awful, but aside from
| that, the UX is abysmal. It feels like it redirects no less
| than 8 times to get to the credit card page. My phone won't
| even load it, so I have to do it on my computer.
|
| It's so frustrating to me because I feel like they're 90% of
| the way there and just need a bit of UX work. But I've had
| that feeling for years now, with no real progress made, so am
| slowly moving away. If you don't touch your money often, it's
| probably fine - great even, but it became too frustrating for
| me in the end as an everyday use account.
| nothercastle wrote:
| Good to know that Elan services the card and is terrible.
| I'll avoid
| js2 wrote:
| FWIW, I've been using the card since late 2019 and had
| zero issues with it. There aren't a lot of 2% cards that
| just straight give you 2% cash back w/o any hoops[1]. The
| Fidelity card is no muss no fuss for me. 2% just
| magically appears in my designated Fidelity account at
| the end of the month.
|
| I have not had to interact with Elan customer service, so
| I can't speak to that. I also don't care about the
| Fidelity mobile app (I use fidelty.com from my laptop). I
| haven't had any issues using fidelty.com to manage the
| card.
|
| [1] https://old.reddit.com/r/CreditCards/wiki/list_of_fla
| t_cashb...
| hawaiianbrah wrote:
| I used this card for a few months before usbank launched
| their smartly card, at which point I moved 100k from
| fidelity to a usbank IRA and now enjoy 4% cash back.
| js2 wrote:
| Bogleheads thread for folks who want to read about
| additional experiences:
|
| https://www.bogleheads.org/forum/viewtopic.php?f=2&t=4387
| 60&...
|
| How's the U.S. Bank web site to use? Is it easy to setup
| beneficiaries on the IRA? How about doing backdoor Roth
| contributions? Did you have any trouble getting the 4% or
| was it right away? Does the 4% deposit automatically to
| an account or do you have to login to redeem it?
| ghaff wrote:
| I've had to replace the card once or twice for various
| reasons and never had any issues. It's a good enough
| offer that I'm not likely to jump through hoops or create
| some big other account to improve on. I'm not down to a
| single account but I've simplified things and
| diversified.
| dweez wrote:
| Matt Levine has a bit about the best customer service your
| broker can provide is not picking up the phone in a crisis.
|
| Bad UX is, intentionally or not, consistent with Vanguard's
| long-term index investing philosophy. Call us? Use our website?
| Whatever it is you are trying to do, you probably shouldn't be
| doing that.
|
| I kid, but only a little.
| noirbot wrote:
| It's interesting everyone's saying the UX is bad. I've had
| consistently good interactions with Vanguard's support over
| the years. I regularly get to talk to an actual human without
| waiting more than 10-20 minutes, and they're very helpful
| about getting things done and giving even basic advice about
| tradeoffs in different investing options.
|
| The website isn't amazing, but I don't feel like it's
| terrible either. There's much worse 401k/IRA providers out
| there.
| sockaddr wrote:
| Yeah, as a litmus test of how much they care about their
| customers try to call in and get something done.
|
| Vanguard will throw you into an automated labyrinth with the
| only exit being a poorly-trained rep in india or pakistan that
| has no real understanding of what you're trying to do.
|
| Their website is complete trash compared to the other big two.
| Often down, you can only check your balance, etc.
|
| Fidelity will within a matter of a couple of minutes connect
| you with someone that seems too good to be true. Knowledgeable,
| friendly, going out of their way to help you, they follow up on
| what they say (like calling you back, etc).
|
| Once I got a taste of how Fidelity treats people and their
| broader set of products I moved everything over.
|
| Vanguard is circling the drain if you ask me.
| noirbot wrote:
| I'm wondering if I'm on some very different account/plan than
| everyone else. Any time I've ever called Vanguard, I've
| gotten a super well trained rep without much of a wait or a
| call tree. I also had good interactions with Fidelity when I
| used them.
|
| Were you on a plan run through an employer? Or individual?
| JKCalhoun wrote:
| Article mentions their bond funds getting the most dramatic cuts
| -- they didn't list specific symbols though.
|
| Anyone know off the top of their heads which funds specifically?
| Thinking I need to move away from being so stock-heavy.
| fred256 wrote:
| The full list is at the bottom of their press release:
| https://corporate.vanguard.com/content/corporatesite/us/en/c...
| francisofascii wrote:
| Lots of small reductions to the specialty bond funds. VCIT
| and BIV (Intermediate Term bonds) moving from from 0.04% ==>
| 0.03%. One notable drop is with VWOB (Emerging Markets
| Government Bond) going from 0.15% to 0.1%.
| dinkblam wrote:
| > they didn't list specific symbols though.
|
| rule of journalism: never quote the original news/article
| source
|
| rule of financial journalism: never list the ticker/wkn/isin
| that would make the article actually useful
| psunavy03 wrote:
| Rule of legal journalism: never link a PDF to the actual
| court opinion/decision . . .
| ryandrake wrote:
| Rule of science journalism: never link to the paper.
| im3w1l wrote:
| Bonds kind of fell of my radar for a while. What are yields
| like now?
| loeg wrote:
| 4-5%
| JKCalhoun wrote:
| I always upvote the archive link unless it is already the top
| comment, ha ha.
| dang wrote:
| I've detached this comment from
| https://news.ycombinator.com/item?id=42933291 so I could move
| the latter to the top :)
| sega_sai wrote:
| That only applies to US funds, but not in the UK ones which
| continue to be significantly more expensive...
| cess11 wrote:
| My broker doesn't show fee on some of the Vanguard instruments,
| but e.g. the S&P 500 UCITS ETF (USD) has 0.08 % listed as fee.
| Which ones are you looking at?
| nexle wrote:
| VWRA (all world UCITS) probably the more famous one charging
| 0.22%, while the closest corresponding US ETF VT (total
| world) is just 0.06% (dropped from 0.07%)
| loeg wrote:
| How does AUM compare between the two?
| sega_sai wrote:
| FTSE All-World UCITS ETF (VWRP) has 0.22%
| giantg2 wrote:
| How do those compare to average expense ratios and fees in that
| market?
| francisofascii wrote:
| Vanguard FTSE Europe ETF (VGK) is only 0.06%
| callamdelaney wrote:
| Didn't they recently increase uk fees a tonne?
| manojlds wrote:
| That was the platform fees.
| andsoitis wrote:
| Straight from the source:
| https://corporate.vanguard.com/content/corporatesite/us/en/c...
| latchkey wrote:
| 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
| thorncorona wrote:
| cynically, crypto's greatest achievement thus far has been
| speed running 200 years of financial mistakes and explaining
| why we need financial regulation.
| latchkey wrote:
| It is so predictable to get a straw man argument like this.
|
| https://news.ycombinator.com/item?id=26238410
| dsr_ wrote:
| It's not a straw man argument when the counterargument you
| propose is "actually, evading regulation is the point".
| latchkey wrote:
| If a country does not have a functioning banking system,
| then it isn't evading regulation.
| mdasen wrote:
| Vanguard funds are owned by the investors in those funds. The
| fees that they charge are to cover the expenses, not make
| profit for a private company. If they're doing so well that the
| fees are brining in more money than they need, they lower the
| fees so that their owners (the investors in the funds) don't
| have to pay as much in fees.
|
| Their business is doing so well that they can lower fees.
| latchkey wrote:
| > Their business is doing so well that they can lower fees.
|
| The counter to that is that they are not doing so well, that
| they need to attract more investors.
| cbg0 wrote:
| Your counter assumes that it's one or the other, but there
| could be more reasons, such as doing well but looking to
| steal even more market share.
|
| At over $10 trillion AUM, it's hard to think that they're
| "not doing so well".
| latchkey wrote:
| So then why reduce fees now? Why not years ago? Are they
| just suddenly feeling that generous?
| toast0 wrote:
| Vanguard has been reducing fees on a pretty regular
| basis.
|
| My assumption is that the corporate leaders go for a dip
| in the McDuck money pond every year, and when the level
| is too high that it risks overflowing, they adjust the
| fees down.
| wbl wrote:
| I have heard from people who were contactors that
| everyone brings their lunch at Vanguard. No money pond
| here!
| giantg2 wrote:
| I doubt at that size you could attract enough new money to
| offset the reduced revenue from reducing fees on the
| existing $10T.
| bityard wrote:
| There is a difference between investment and speculation and
| lots of people learn it the hard way, eventually.
| latchkey wrote:
| Typically: Investment is long term. Speculation is short.
| Investment is looking for a gradual return over time.
| Speculation is betting on price.
|
| I've been long on crypto since 2013, I'm not a crypto day
| trader, and I'm well aware of DeFi. I consider that an
| investment, not speculation.
|
| Let people treat things the way they want to. All of the
| people who want to stick with Vanguard and their position are
| free to do so.
| recursive wrote:
| And now I trust Vanguard just a little more.
| turnsout wrote:
| Agreed--this strengthens my feelings about the brand. And I
| write this as someone who also holds (a tiny amount of)
| crypto
| greenavocado wrote:
| Vanguard won't let you trade anything even tangentially
| related to crypto FYI
| greyface- wrote:
| Not true. I own a few shares of MSTR in my Vanguard
| brokerage account.
| latchkey wrote:
| Good choice, one of my best investments ever. Get to 100
| shares and sell some covered calls.
| niceice wrote:
| What happens at 100 shares?
| latchkey wrote:
| I'd rather not have to "trust" any financial institution.
|
| https://www.cnbc.com/2025/01/17/vanguard-fined-more-
| than-100...
|
| https://asic.gov.au/about-asic/news-centre/find-a-media-
| rele...
|
| https://www.reuters.com/business/finance/vanguard-fined-
| prov...
| bluGill wrote:
| You are likely to have to trust them eventually. SPIC
| insurance is $500,000. If you have more than that and it
| turns out instead of buying the investments you think they
| were a ponzi scheme that sent the money to the owners when
| it is discovered you get up to $500,000 of your money back,
| while the rest is your loss. You really should have more
| than that by age 40 if you want a comfortable retirement
| (that is todays dollars, if you are 18 now when you hit 40
| inflation will have made the number bigger, while if you
| are 80 the number when you were 40 would have been lower)
| latchkey wrote:
| I'd rather not have to trust a non-profit insurance
| company to keep a very small portion of my funds safe.
| This stuff should be in-code and immutable by any one
| individual or corporation.
| Dylan16807 wrote:
| If you use a separate broker for each $500k then you only
| have to worry about multiple brokers catastrophically
| failing at the same time. And there are multiple types of
| account with each type having a separate $500k limit.
| recursive wrote:
| I'd rather not have to either. I'm going to be honest. I'm
| not a smart man. I don't understand the first link at all.
| The other two I don't care about.
|
| _However_ , to the extent that those things are bad, they
| are much less bad than my trust in myself to securely
| manage a crypto wallet key.
|
| If there was some magic thing that just automatically
| worked and I could somehow trust it, I would be all in.
| That's not the case for any cryptocurrency I know of
| because you need to A) maintain access to your wallet key
| and B) prevent other people from getting it and C) don't
| inadvertantly click any of those links that drain your
| account that I've heard of (I don't understand the details)
|
| If you can put in the research and discipline to satisfy
| those requirements, I'm certainly not going to try to talk
| you out of it, but they're way to steep for us normies.
| latchkey wrote:
| The internet was very confusing to most people before AOL
| came along and gave out free CD's with email addresses.
|
| Just because the UX sucks today, doesn't mean the
| fundamental underlying technology isn't something worth
| building on.
|
| By the way, if you think crypto UX is hard, try trading
| options with thinkorswim.
| recursive wrote:
| > By the way, if you think crypto UX is hard, try trading
| options with thinkorswim.
|
| You've misunderstood me. I have no interest in shitty UX.
| A competition for the shittiest UX is like the lowest
| high jump. You want a shitty UX? I can get you one by
| 4:30, with nail polish. The fact that extremely confusing
| UX is easy to find in no way mitigates a merely _very
| confusing_ UX.
|
| I kind of agree with you though. Cryptocurrency is kind
| of a neat idea. Shame about the actual manifestation
| though. I'm not opposed on principle. If anyone ever
| figures out how to make it good, I'll check it out. But
| in the first 15 years, nothing reasonable has emerged. I
| don't have much hope for the next 15 years either.
|
| Maybe someone will figure it out, but I don't think
| that's actually going to happen. So I don't think
| investments in cryptocurrency research or whatever is a
| good idea.
| latchkey wrote:
| Define "make it good", cause the way I see it today, it
| is extremely good. But then again, I understand the UX
| and I don't find it difficult at all.
|
| I actually wonder if you've tried it... it really is just
| put in an address, amount (of any size), and click send.
|
| Want to earn interest or borrow funds? Load up
| Morpho.org, deposit into a vault of your liking and
| borrow whatever you want. No need to ask anyone for
| permission and fully decentralized. Even the source code
| is public and audited. Don't trust it? There's nearly $6B
| in there and Coinbase built a whole product around it. It
| couldn't be all bad.
|
| I think things have progressed quite a lot in the last
| few years. Take a look, you might be surprised.
|
| The UX for some of my banks are way worse. For example,
| the limits on transfer sizes are obtuse. 25k limit? WTF,
| it is my money, let me move it around how I wish, I'm not
| a criminal.
| ch4s3 wrote:
| 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.
| latchkey wrote:
| 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...
| Aloisius wrote:
| 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.
| syspec wrote:
| Someone correct my math here, but if they have 10 trillion in
| assets under management and the management fee is 0.07% then
| that's still 7,000,000,000 or 7 billion in fees every year?
|
| Not bad
| giantg2 wrote:
| Interesting. That would put their budget higher than the bottom
| 10% of state budgets.
| loeg wrote:
| Revenue, not income.
| coldpie wrote:
| Indeed, that is about the stated revenue on their Wikipedia
| page. Divided equally among their 20,000 employees, that comes
| to $350,000 per employee. Expenses like office space, taxes,
| fines/fees, inflated executive compensation, etc will bring
| that down quite a bit; though other sources of income will
| bring it back up too. Sounds reasonable.
| echoangle wrote:
| I wonder what 20,000 Employees are doing there though. I know
| saying "I could do that with 10 people, what are they even
| doing" is a meme here, but I really can't make a good guess
| what the employees are actually doing. Risk assessment,
| looking for new investment opportunities, regulatory
| paperwork, marketing? 20,000 is a lot of people.
| coldpie wrote:
| One way to get a hint at what kind of work employees do is
| by looking at open job postings:
| https://www.vanguardjobs.com/job-search-results
| echoangle wrote:
| Nice link, thank you!
| lolc wrote:
| I imagine they have actual customer service. But maybe I'm
| naive?
| echoangle wrote:
| In what situation would you contact them? Aren't
| basically all possible problems you could have something
| you would contact your broker for?
| zerocrates wrote:
| Vanguard is also a broker.
| stearns wrote:
| Right, you are hinting at the angle that other commenters
| have pointed at, which is that Vanguard runs a fund
| management business (which is what the article is about)
| but also runs a brokerage, does 401k/403b/529
| administration, has an advisory business, etc. The total
| employee count refers to employees working across all
| those business units, and that includes a lot of customer
| service, regulatory, back office, etc.
| thehappypm wrote:
| How many people is ideal to look after $10,000,000,000,000
| in assets? Some bloat is definitely necessary at these
| mind-boggling numbers, and assets-per-employee is still
| half a billion.
| omgJustTest wrote:
| Unless you have some super special edge, Vanguard is really good
| IMO. Having a 0.01% or 0.05% fund is really as good as you can do
| and never pay attention.
|
| Vanguard also has things like the VIGAX (0.05%) and the VITAX
| (0.09%) with excellent returns over the past 20 years.
|
| You could also actively invest, where you can get lucky, but if
| you have a day job... it gets tougher.
|
| edit: also you could do "better" with lower fee funds, but they
| typically dont match the performance over the time period, and
| fidelity is a recent entry for their funds.
| tobiasdorge wrote:
| actively investing is 1) hard and 2) really just a waste of
| time considering the amounts most people are dealing with. I
| think it may have been from A Random Walk Down Wall Street but
| the general notion is something like this:
|
| You have a 500k portfolio, and you spend the average amount
| week managing your portfolio (12 hours). If you were to achieve
| a 2% alpha (which is considered insanely high for any actively
| managed fund, and almost impossible to replicate year after
| year), you have made an excess $10k over what you would have
| made investing your portfolio in a benchmark.
|
| On an hourly basis that's about $16 per hour spent... you could
| get more reliable income working at a gas station in
| California. And of course, most people are not investing $500k,
| the vast majority of day traders are probably pulling their
| hair out managing <$100k...
| bluGill wrote:
| The counter is smaller returns are easier for small
| investors. If you are a large investor just the act of buying
| stock changes the price.
| frognumber wrote:
| 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.
| guntars wrote:
| With 7% interest it's over 200k.
| pinkmuffinere wrote:
| Sure but that's an order of magnitude above the numbers the
| parent is comparing? A 7% fee is certainly crazy, agreed with
| you there
| frognumber wrote:
| guntars did the amortization on $25k growing with interest
| (not fees). In other words, the claim is that 0.5% can be
| significant. Which is true.
|
| When I did the math with my life savings, 0.5% was about
| the breakpoint where things become significant. $200k would
| be more significant, so I suspect when I did the math
| properly, I was expecting to retire in less than 50 years.
| In 50 years, I'll likely be dead.
| pinkmuffinere wrote:
| Ah I see, the 7% yearly interest on the 0.5% fee can add
| up to be significant. That is a good point, good job
| @guntars
| HDThoreaun wrote:
| No. https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+f
| rom+0...
| loeg wrote:
| I agree that minute differences don't really matter. E.g.,
| 0.09% vs 0.07%; who cares. Differences as large as 0.5% are
| much more material in the long term, though.
| boglethemind wrote:
| Agreed. I'm looking for non-financial features at this point.
| Vanguard supports FIDO hardware keys and Fidelity doesn't.
|
| I'm not storing my retirement funds in the latter.
| wil421 wrote:
| 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
| ...
| francisofascii wrote:
| That is the average. Many of them are just 0.03% or 0.04%
| Maxatar wrote:
| 2% over 30 years is inconsequential. At an average rate of
| 7%, that mean you'll grow your investment by 759% over 30
| years instead of 761%.
| neogodless wrote:
| ... of the _original_ value, ignoring growth, dividends, and
| inflation.
| layer8 wrote:
| For index funds, the important measure is the tracking
| difference [0] anyway. While the costs contribute to it,
| different ETFs on the same index differ in their
| typical/historic tracking differences beyond their differences
| in nominal cost.
|
| [0]
| https://www.morningstar.com/business/insights/blog/funds/etf...
| Temporary_31337 wrote:
| The only concern now is whether the indexes keep growing.
| b8 wrote:
| I switched from VTI to ITOT, because Vanguard's actions recently
| have been drifting away from it's founders. This inspires
| confidence, but I'm still wary. VTI is too expensive compared to
| ITOT. Fidelity doesn't have any ETFs listed on the Bogleheads
| website either [0].
|
| 0. https://www.bogleheads.org/wiki/Three-fund_portfolio
| loeg wrote:
| > VTI is too expensive compared to ITOT.
|
| What? Both are 0.03% ER funds.
| b8 wrote:
| I meant price wise. VTI is almost $300 per share.
| EVa5I7bHFq9mnYK wrote:
| Fees are good but I am concerned about too much correlation in
| the markets, caused by index funds. Basically everyone holds the
| same assets.
| layer8 wrote:
| Any imbalance should be easily exploitable by market players,
| so I would think it should be self-correcting.
|
| Also, worldwide there are quite different preferences in which
| indexes to hold, so there is some variation.
| aantix wrote:
| 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?
| echoangle wrote:
| Probably because no matter how agile you are, you'll never be
| more agile than the market. And being much slower isn't worse
| than being a little slower.
| WXLCKNO wrote:
| Does average investor here imply someone who's educated on the
| topic and knows what he's doing?
|
| And you're also saying investor, not trader. So moving in and
| out quickly doesn't matter as much if we're talking about mid
| to long term holds.
|
| It also makes sense that those with the largest edge in
| decision making for trades would collect most of the money.
| Maxatar wrote:
| It should not come as a surprise. While it's a bit of a
| simplification, index funds are effectively a representation of
| the average surviving investor...that is among all investors,
| index funds are the average of those who have not yet gone
| broke. The investors who have gone broke get culled out.
|
| So it should not at all be surprising that index funds perform
| better than the average investor.
|
| Furthermore, as far as agility is concerned, it doesn't play
| much of a role in the market. Almost all gains in the stock
| market over the course of a year come from a handful of days.
| For example in 2024, just 9 days account for the entire yearly
| gains.
| paulpauper wrote:
| Some can. I have done well with leveraged tech funds.
| aantix wrote:
| Is TQQQ a long-term holding?
|
| You could stomach the 80% draw down?
| Maxatar wrote:
| I've been holding it for close to 10 years, it's my best
| performing holding by a long shot. I like to hold leveraged
| ETFs in my tax-free investment account and TQQQ along with
| UPRO are the ETFs of choice for me.
| aantix wrote:
| Fascinating.
|
| What are the black swan events for those holdings - I
| assume they can get margin called?
| v-yanakiev wrote:
| For plausible definitions of "average investor" in this
| context, it's arithmetically impossible:
| https://web.stanford.edu/~wfsharpe/art/active/active.htm
| TheDong wrote:
| All the easy alpha has already been taken by high-frequency
| traders and big trading firms, and once all the easy alpha is
| gone, you're left more-or-less just tracking general market
| behavior... just like index funds.
|
| Except being more agile also means eating more fees.
| bluGill wrote:
| Agile is not something a small investor can win at. You can win
| by reading the 10k and such and then following what is
| happening in the real world and thus predict what will happen.
| You should be able to make a nice income doing this full time,
| but it won't be get rich, and probably won't be even tech
| levels. Note that I said full time. You will follow many
| companies and conclude the market is right and thus not do
| better, while what you need is the one where you can figure out
| in advance the company will do good/bad before the market does
| and thus buy/sell in advance.
|
| Peter Lynch famously (he was then manager of the world's
| largest fund) got out of Gap when he noticed his daughters
| didn't buy anything there for school and that was his clue that
| they wouldn't do well next quarter. Gap as had ups and downs
| since. This is the type of research you will be doing all the
| time, trying to find a evidence of a company that will
| disappoint before anyone else knows. This is hard hard hard,
| and is always a matter of luck. Remember by the time it is
| public the large players already know and have acted (that is
| they get alerts the instant it becomes public and are first in
| line to act on it, technically you get the information at the
| same time and can act as fast but in practice you will not)
| websap wrote:
| What does this mean for folks like me who buy Vanguard ETFs
| through Robinhood.
|
| The Vanguard UI / UX is absolutely terrible. Opening the website
| instantly transports me to 2002.
| qntty wrote:
| I see several people complaining about this in this thread. Are
| you talking about their old interface or the new one they
| released a couple years ago? I find their new one to be decent.
| It's a little complicated sometimes, but I think it's hard to
| build a site that allows you to do so many things without being
| a little complicated.
| travisr wrote:
| The fees will be the same regardless of where you buy Vanguard
| funds.
| noveltyaccount wrote:
| I'm a big fan of Vanguard, but if anyone is looking for
| competitively-priced funds from other issuers, check out
|
| - iShares Core (Blackrock)
| https://www.ishares.com/us/strategies/core-etfs
|
| - SPDR Portfolio (State Street)
| https://www.ssga.com/us/en/individual/fund-finder
|
| - Schwab Select (includes in-house and third-party)
| https://www.schwab.com/research/etfs/tools/select-list
| hassleblad23 wrote:
| Which of these do you use personally?
| noveltyaccount wrote:
| A mix. For a given asset class I look at expense ratios and
| underlying indexes.
| vanrohan wrote:
| I wish there can be more focus on the voting rights for passive
| funds. Investors are concentrating voting power with these fund
| managers, just giving away their voting rights for free. I'd like
| to see better investor voting management systems become more
| available for "pass through" voting for passive fund investors.
|
| [1] https://vanderwalt.de/blog/etf-vs-direct-indexing-
| investing-...
| bluGill wrote:
| It isn't possible to have an informed vote for the 500
| companies in a S&P index fund and still have a life.
|
| I probably have an informed opinion on the company I work for -
| but I don't have enough shares to matter. The other 499 I know
| nothing about.
| nly wrote:
| Not for UK investors apparently.
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