Schwab S&P500 Mutual Fund has 0.03% expense ratio, trades for free

[ochotona]

The Schwab S&P500 mutual fund, SWPPX, now has a 0.03% expense ratio, and it trades for free at Schwab. I checked with a rep over there, there is no minimum holding period for SWPPX.

This is a better offering than Schwab's large cap ETF, SCHX, also with expenses 0.03%, and trades for free at Schwab. I backtested them against each other, and SWPPX won; CAGR +0.05, lower drawdown, better Sharpe / Sortino ratios. Testing period was 2010-today.

SWPPX stacks up fine against IVV and VOO. VOO has 0.03% more CAGR, but the tiniest bit worse drawdown, and same Sharpe / Sortino ratios. This is hair-splitting territory.

I like mutual funds in a way because they trade in fractional shares... I hate having little cash fragments lying about because I can't buy fractional ETF shares. Though I have learned to wait until a few minutes before market closes to place my trade, so I'm happy with the price that I will probably get at end-of-day.

[mathjak107]

be careful here . the schwab s&p 500 fund is quite tax inefficient if it matters to you .

not all s&p funds own all 500 stocks . only 50 funds really dominate the index . the rest act as just filler so some funds more than other trade in and out of the less crucial stocks creating tax liability.

compared to vanguard the schwab s&p 500 fund has more than 2x the effective tax liability and is actually one of the worst in that respect .

if it is inside a retirement plan , not an issue but in a brokerage account you may want to think twice .

schwab is number 6 .

[dualstow]

Damn, that is a low expense ratio. I am pretty happy with Vanguard's S&P fund.

I also like being able to buy fractional shares. Until recently, I had Vanguard's smallcap blend fund on auto-invest, with the same amount of money going in every week.

[eufo]

iShares IVV gives you an ETF option for S&P500 currently at 0.04% ER. http://etfdb.com/etf/IVV/

Competition has definitely been a good thing for us little guys!

[mathjak107]

i can trade ivv free as well as shy and tlt at fidelity

[ochotona]

Mathjak, in a severe waterfall market decline, is a mutual fund safer than an ETF? You can sell an ETF at a price way different than the underlying NAV, which could be really bad. At least with a mutual fund you get the true NAV after the close , correct?

[dualstow]

Why sell during a "waterfall decline"?

[ochotona]

Why sell during a "waterfall decline"?

Good point. Hypothetical question, along the lines of ammo stopping power.

[mathjak107]

the ramifications of that can be a double edge sword .

in a waterfall decline like we had after brexit look at what happened to some very popular etf's like DVY .

they became so out of whack from trade imbalances that at one point some etf's which had pretty heavy volume were down an insane amount vs the markets .
DVY was being sold out when it was down a whopping 35% while the underlying stocks were down only 5% if you had a stopp loss on it . .

it took a few minutes for arbitrators to get things back in line .

etf's can be a lot more volatile because they are sold short . you also have spreads to deal with . look at those spreads on SLYV at times .

bond etf's can also sell at a premium or discount compared to a fund . that is not so bad with stock etf''s but bond etf's are another story . they tend to develop wider spreads .


buy at a premium and sell at a discount and you get extra whacked . open end funds are always at nav .

i like etf's because i do tend to take advantage of certain situations and trade but they do have some other factors to be concerned about .