vanguard still must use brokers like fidelity and schwab to facilitate flows. Qualified dividends are taxed at the capital gains rate, and non-qualified dividends are taxed as income, in both cases. There are usually minimums for mutual funds and as the minimum investment increases, you tend to see lower expense rations for the higher minimum funds. The other big difference, even though I don't personally care about this one, is psychological. Cookies help us deliver our Services. I know that they both have rock-bottom low expense ratios, and that it is just one basis point, but I would have expected VTSAX to have a lower expense ratio due to its higher minimum investment ($3,000 for VTSAX vs. $149.05 for one share of VTI). Some people stress out or don't understand the ETF purchasing process. I wonder how much payroll/operating costs that .01 difference supports. Do these ETFs sell at a premium/discount to their NAV like most ETFs? ETF are traded on an exchange. Both VTSAX and VTI have grown by about 370% over the last decade. So the ETF may be a different share class that is tied to the higher minimum Mutual fund. I’ve been buying VTSAX forever. If these ETFs never trade at anything other than their NAV price then Vanguard couldn't sell them with expense ratios. Am I making a mistake by not buying VTI instead? I know that they both have rock-bottom low expense ratios, and that it is just one basis point, but I would have expected VTSAX to have a lower expense ratio due to its higher minimum investment ($3,000 for VTSAX vs. $149.05 for one share of VTI). Things like liquidity, market price vs NAV, tax benefits, etc, They are exactly the same in Vangaurds case. Basically overhead. Don’t lose sleep over it. Here's the pricing information from Vanguard's site: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX), (No premium/discount, since the price reflects NAV). VTSAX’s expense ratio is 0.04% and VTI’s expense ratio is 0.03%, which essentially means that investors will pay $1 more in management fees for every $10,000 that they invest. Informations sur votre appareil et sur votre connexion Internet, y compris votre adresse IP, Navigation et recherche lors de l’utilisation des sites Web et applications Verizon Media. Prospectus Gross Expense Ratio … Or they will try to market time the ETF purchases. I think you are incorrect. Does it have to do with the $0.02 premium built into VTI? there is less human intervention (back office) for etfs. I understand the difference between mutual funds and ETFs, but why does the ETF have a lower expense ratio? If someone has a bonus transfer, you can easily get it. The company has a patent on its ETF structure allowing it to treat its ETFs as a different share class to its current mutual fund offerings. Sorry, I farted and had to go to another room. True - mutual funds can't have a spread technically, One is an ETF and one is a mutual fund, you could read up on the differences, but this is one dollar per 10,000. When you buy into the mf , you buy from Vangaurd, now it has to record all that information, keep track of your buys, your cost basis , all that stuff. Prospectus Net Expense Ratio 0.04% N/A. Vanguard VTSAX has an expense ratio of 0.04% per year. ETFs structurally are slightly lower cost to administer than mutual funds, all other things being equal. Vous pouvez modifier vos choix à tout moment dans vos paramètres de vie privée. The minimum initial investment is $3,000. I wonder how Vanguard is going to capitalize on this? Had the same question, commenting to get notifications. It’s my primary holding. This means that for every $10,000 you invest into the fund, you will pay $4 each year in management expenses. If you want better support for something, I've actually prefer Fidelity even though I trust Vanguard funds the most. while I do not know for certain I will take a stab-. Most people don't do that with mutual funds since nav is set at the end of the day and you have no control over the daily timing. Anyone know how to compare the same ETF and mutual funds, i.e. Whether it is a mutual fund or ETF, you pay capital gains tax on gains realized at sale. Pour autoriser Verizon Media et nos partenaires à traiter vos données personnelles, sélectionnez 'J'accepte' ou 'Gérer les paramètres' pour obtenir plus d’informations et pour gérer vos choix. I wouldn't worry about the small cost difference. This means that for every $10,000 you invest into the fund, you will pay $4 each year in management expenses. It's negligible at this low rate, even for large portfolios. Expense VTSAX Category Average. I used the information you provided above. Yah, the difference in cost is practically 0, but the question of 'why' has been bothering the hell out of me for some reason. I have heard etf's have a larger bid ask spread than mf's. When you buy an ETF Vangaurd has to do nothing, it doesn't even know you own the ETF. this is somewhat masked because vanguard forces a surcharge upon the buys/sells that originate at another broker. It has no extra work or anything it needs to do, like I said it doesn't even know you bought it. When you buy an ETF from an exchange your brokerage keeps track of all that stuff, when you buy a MF from Vangaurd they need to do all the records keeping, This is the perfect answer. New comments cannot be posted and votes cannot be cast, Press J to jump to the feed. The fund’s expense ratio is 0.15 percent, which is classified as low by Morningstar. That said, if you like investing automatically or frequently with small amounts, it's hard to beat a mutual fund. I am wondering why (or how) Vanguard is able to offer a lower expense ratio for its total stock market index fund ETF than it does for its mutual fund equivalent. By using our Services or clicking I agree, you agree to our use of cookies. Nos partenaires et nous-mêmes stockerons et/ou utiliserons des informations concernant votre appareil, par l’intermédiaire de cookies et de technologies similaires, afin d’afficher des annonces et des contenus personnalisés, de mesurer les audiences et les contenus, d’obtenir des informations sur les audiences et à des fins de développement de produit. Expense Ratio: 0.04%. There's an obvious spread between Mkt price and NAV. Yahoo fait partie de Verizon Media.

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