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DustinVoss

Mutual Funds vs ETF. Is there an advantage if the e/r is the same?

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Just thinking about this question. I suppose an ETF would be more vulnerable to volatility and possibly transaction fees. But the ETF also benefits from quarterly rather than annual dividends. Is my thinking correct? What are your thoughts?

The impetus for this question being Schwab putting out new Mutual Funds with the same e/r of their ETFs that I already hold.

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Tony! Thanks so much for that comparison tool! I didnt even know about that and it reveals what you probably already knew... its half a dozen vs 6. Schwab Total ETF and Schwab Total MF differ very slightly

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My mutual funds give me quarterly distributions, not annual. An ETF’s underlying investments are the same as a mutual fund; I wouldn’t expect a difference in volatility.

Buying and selling an ETF comes with more complexity because you can essentially day trade it. Bogle is against ETFs for this use case, which is the only way ETFs are substantially different as far as I know.

...as usual, I’m with Bogle. 

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My understanding of Bogle's opposition is that it stems form the temptation to day trade ETFs. Am I missing something? If I buy and hold, there probably is not much of a difference.

Tony... I originally moved to ETFs from a Schwab Target Date fund because I decided I could actively manage ETFs (at that time they had lower e/r than the Schwab index funds) and reduce my fees. This was actually confirmed by FeeX if you're familiar with that app/company. Right now I mix ETFs and mutual funds, holding and buying both depending on a number of factors.

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If you buy and hold then you’re fine. However, I’m not sure what an ETF is giving you in that scenario that a mutual fund wouldn’t also provide.

I find ETFs to be slightly annoying because I don’t think you can buy fractional shares.

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