Gyroscopic Investing

In my opinion the fund is better.  Since the fund and the ETF have the same expenses, the fund does not have bid/ask spread issues (although with VTI this is probably not too big a deal).  If you have an account with Vanguard, buying ETFs also requires a brokerage account in addition to the regular mutual fund account.  Outside Vanguard there may be commissions on ETF trades, although many brokerages do offer free ETF trades as well.

One of my few gripes with Vanguard was when they offered free trades for ETFs, then shortly thereafter lowered Admiral minimums for many funds.  I would own no ETFs if the order of those changes were reversed.

welcome TPG,

see http://gyroscopicinvesting.com/forum/in ... opic=243.0

where similar question is discussed.

I wish I had gone into the mutual fund, mainly to avoid inherent risks of TEFs. With the PP strategy, there is almost no benefit to using ETFs where comparable fund is available.

p

Other than cost differences, aren't there capital gains differences? My understanding is that many ETFs are more immune to capital gains triggered by others selling off in a market decline. Not sure if this is true with Vanguard though.

I doubt that there would be much if any difference in capital gains distributions between VTI and VTSAX.

Vanguard is pretty good at tax management.

Vanguard ETFs are unique because they are a share class of the mutual fund itself. So there is basically no advantage of the ETF over the fund for vanguard. They almost certainly are using the ETF shares to mitigate taxes in the main fund. The ETFs are nice if you don't have access to the fund. But other than that they are more hassle and expense with bid ask spreads and commissions. If you are doing lump sum investing the etfs would be fine. But monthly purchases would get expensive with transaction fees vs. just using the fund which has no fees for new purchases.

FYI, TD Ameritrade does not charge when you purchase VTI, TLT, SHY, or SHV so that would be the least expensive route not Vanguard. One advantage of ETF's is when you buy you want to buy them all at the same time. If you buy IAU & TLT during the day & the mutual fund version of VTI at the close you get slippage. Not a big deal in the long run but I still prefer to buy all at the same time. And VTI is better tax wise as their is a loop hole in the tax law regarding capital gain distributions.

julian wrote: And VTI is better tax wise as their is a loop hole in the tax law regarding capital gain distributions.

Can you explain? I'm curious.