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I think that tax loss harvesting illustrates my point. I don't know if Vanguard's service currently supports tax loss harvesting but its a feature that takes a

I think that tax loss harvesting illustrates my point. I don't know if Vanguard's service currently supports tax loss harvesting but its a feature that takes about 1 man week of work to implement. Tax loss harvesting isn't a feature that you can differentiate yourself with. I've implemented it several times over for the hedge funds I've worked at. Its a well understood tool that's been in use by funds for as far back as I remember.

gohrt 11y ago
Why doesn't Vanguard do tax-loss harvesting yet?
- edc117 11y ago
  Excellent question, does anyone know? I'd like to know the answer as well.
- cushychicken 11y ago
  I'd imagine it would be illegal for Vanguard to implement in the way that Betterment does. Betterment buys exchange traded securities to allow their customers to participate in the underlying mutual fund. They can basically jump from a Vanguard ETF to a Schwab or iShares ETF of a similar market. I'm reasonably certain it would be illegal for Vanguard to purchase a competing fund's ETF as it would be directly affecting the business of a competitor. In fact, I'm not even sure how Vanguard could do this in any manner that would be customer facing.
  - deleted 11y ago
    [deleted]
  - ac29 11y ago
    > I'm reasonably certain it would be illegal for Vanguard to purchase a competing fund's ETF as it would be directly affecting the business of a competitor. I can buy whatever companies ETF I want with my Vanguard account. Why would it be illegal?
    - cushychicken 11y ago
      I'm referring to their mutual fund, not purchases you make on their trading platform.
Retric 11y ago
> 1 man week of work to implement. A more realistic estimate is probably 6 people for 2 years. Plus increased support costs. Large financial companies are often ridiculously slow to roll things out, but as a customer you want risk aversion not bugs.
ffumarola 11y ago
> but its a feature that takes about 1 man week of work to implement. A good example of how estimates in software are usually off by large factors. Determining the best exit point to harvest a loss at, for example, would probably take more than a week. And that is just one small piece of the model.
cushychicken 11y ago
As I mentioned in a few child comments, I don't think Vanguard can implement tax loss harvesting in a way that's customer facing at all. They certainly can't implement it in the way that Betterment does - that would involve purchasing competing mutual funds' ETFs, which I'm sure the SEC would view as anticompetitive. I suppose you could do something like that within a sector - trading an Amazon for an Apple in tech, or a Shell for an ExxonMobil in oil - but that's betting on a lot of independent factors besides the performance of the commodity or sector as a whole.

gohrt 11y ago

Why doesn't Vanguard do tax-loss harvesting yet?

edc117 11y ago
Excellent question, does anyone know? I'd like to know the answer as well.
cushychicken 11y ago
I'd imagine it would be illegal for Vanguard to implement in the way that Betterment does. Betterment buys exchange traded securities to allow their customers to participate in the underlying mutual fund. They can basically jump from a Vanguard ETF to a Schwab or iShares ETF of a similar market. I'm reasonably certain it would be illegal for Vanguard to purchase a competing fund's ETF as it would be directly affecting the business of a competitor. In fact, I'm not even sure how Vanguard could do this in any manner that would be customer facing.
- deleted 11y ago
  [deleted]
- ac29 11y ago
  > I'm reasonably certain it would be illegal for Vanguard to purchase a competing fund's ETF as it would be directly affecting the business of a competitor. I can buy whatever companies ETF I want with my Vanguard account. Why would it be illegal?
  - cushychicken 11y ago
    I'm referring to their mutual fund, not purchases you make on their trading platform.

Retric 11y ago

> 1 man week of work to implement. A more realistic estimate is probably 6 people for 2 years. Plus increased support costs. Large financial companies are often ridiculously slow to roll things out, but as a customer you want risk aversion not bugs.

ffumarola 11y ago

> but its a feature that takes about 1 man week of work to implement. A good example of how estimates in software are usually off by large factors. Determining the best exit point to harvest a loss at, for example, would probably take more than a week. And that is just one small piece of the model.

cushychicken 11y ago

As I mentioned in a few child comments, I don't think Vanguard can implement tax loss harvesting in a way that's customer facing at all. They certainly can't implement it in the way that Betterment does - that would involve purchasing competing mutual funds' ETFs, which I'm sure the SEC would view as anticompetitive. I suppose you could do something like that within a sector - trading an Amazon for an Apple in tech, or a Shell for an ExxonMobil in oil - but that's betting on a lot of independent factors besides the performance of the commodity or sector as a whole.