Minimizing counterparty risk

[murphy_p_t]

I am interested in minimizing counterparty risk for the stock portion of the pp. Using a fund or ETF.

VTI is commonly referenced on this forum.

The equivalent mutual fund at vanguard is vtsax.

It seems that holding a mutual fund at vanguard has lower counterparty risk then owning vti. Perhaps there is no difference?

Is there any difference in counterparty risk of owning vti within the vanguard brokerage account versus owning vti within a fidelity account?

For example, does vanguard keep the component shares of vti in their vault? so if the New York stock exchange went out of business, vanguard could distribute shares, or dividends, to the vti owners?

[whatchamacallit]

Most extreme example may be to use direct stock purchase plans if corporations offer it. I bet they outsource to a holding company if if they do offer it though.

https://www.investopedia.com/terms/d/di ... seplan.asp

Holding a Vanguard mutual fund at Vanguard does at least feel safer than holding Vanguard etf at Fidelity. I do try to do that myself but it may not really matter.

[boglerdude]

When in doubt, Vanguard. Too big to fail.

[I Shrugged]

When in doubt, Vanguard. Too big to fail.

That’s a perspective I had never considered.

[murphy_p_t]

Here's a short Wikipedia relating to the subject

https://en.wikipedia.org/wiki/Cede_and_Company

[I Shrugged]

Here's a short Wikipedia relating to the subject

https://en.wikipedia.org/wiki/Cede_and_Company

Well, that's fascinating.

[I Shrugged]

I would be 99.999% sure that Vanguard held stocks underlying the index are simple book entries for Vanguard. Apparently through the entity you brought up.

[I Shrugged]

Paywall article, but you can see enough to get the drift, from an industry publication.

https://www.americanbanker.com/news/you ... s-fix-that

[murphy_p_t]

Yes... The entire publicly traded equity market in the US is dependent upon something called "Cede"... Which very few have ever heard of.