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What advantages do index ETFs have over a comparable index mutual fund against the same benchmark? Or, to ask another way, is there any reason to prefer anythi

What advantages do index ETFs have over a comparable index mutual fund against the same benchmark? Or, to ask another way, is there any reason to prefer anything other than Vanguard's Index500 vs anything else attempting to replicate the SP 500? (I call out the Vanguard fund because the fees are very low, .14% iirc.)

metalliqaz 9y ago
None that I know of. ETFs are just easy to buy and tend to have low fees.
dragontamer 9y ago
The SPY ETF is 0.0945% per year, although you still pay the broker when you enter or leave the position. Vanguard's prices are great, especially if you get into their top-tier $10,000+ accounts. But ETFs are competitive against Vanguard in my experience. Of course, Vanguard also offers low-cost ETFs. As long as you go with a mainstream option, I don't think you can go wrong.
ravibala1 9y ago
As others have mentioned, there isn't really much of a difference (apart from fees) when you're thinking about it as a vehicle for long-term holdings. Most of the time, 401k plans will not let you hold ETFs - they only let you hold mutual funds. Mutual funds usually can't be traded intra-day. You place your order and they buy/sell at the stated NAV on the close. ETFs can normally be traded intra-day. Again, ex-fees irrelevant to a truly long-term buy-hold-rebalance portfolio.
dpierce9 9y ago
Aside from fees, the trade price is different. ETFs have intraday prices while index funds have a NAV that settles after close.
kbutler 9y ago
Vanguard also provides equivalent ETFs - VOO has expense ratio .04%, vs VFINX .14% - basically the ETF is like the admiral class shares ($10k+ investment). https://advisors.vanguard.com/VGApp/iip/site/advisor/investments/productoverview?fundId=0968 https://advisors.vanguard.com/VGApp/iip/site/advisor/investm... Mutual funds: recurring investment of any dollar amount (fractional shares). Minimum initial investment required. Trade once per day, beware loads, fees, and expense ratios ETFs: buy or sell one or more whole shares, trade throughout the day, beware trading commissions and expense ratios.
loeg 9y ago
ETFs trade mid-day instead of just end of day. You can only buy unit shares (but the unit price is typically far lower than mutual fund minimums). Those are really the only differences I know about.

metalliqaz 9y ago

None that I know of. ETFs are just easy to buy and tend to have low fees.

dragontamer 9y ago

The SPY ETF is 0.0945% per year, although you still pay the broker when you enter or leave the position. Vanguard's prices are great, especially if you get into their top-tier $10,000+ accounts. But ETFs are competitive against Vanguard in my experience. Of course, Vanguard also offers low-cost ETFs. As long as you go with a mainstream option, I don't think you can go wrong.

ravibala1 9y ago

As others have mentioned, there isn't really much of a difference (apart from fees) when you're thinking about it as a vehicle for long-term holdings. Most of the time, 401k plans will not let you hold ETFs - they only let you hold mutual funds. Mutual funds usually can't be traded intra-day. You place your order and they buy/sell at the stated NAV on the close. ETFs can normally be traded intra-day. Again, ex-fees irrelevant to a truly long-term buy-hold-rebalance portfolio.

dpierce9 9y ago

Aside from fees, the trade price is different. ETFs have intraday prices while index funds have a NAV that settles after close.

kbutler 9y ago

Vanguard also provides equivalent ETFs - VOO has expense ratio .04%, vs VFINX .14% - basically the ETF is like the admiral class shares ($10k+ investment). https://advisors.vanguard.com/VGApp/iip/site/advisor/investments/productoverview?fundId=0968 https://advisors.vanguard.com/VGApp/iip/site/advisor/investm... Mutual funds: recurring investment of any dollar amount (fractional shares). Minimum initial investment required. Trade once per day, beware loads, fees, and expense ratios ETFs: buy or sell one or more whole shares, trade throughout the day, beware trading commissions and expense ratios.

loeg 9y ago

ETFs trade mid-day instead of just end of day. You can only buy unit shares (but the unit price is typically far lower than mutual fund minimums). Those are really the only differences I know about.