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Well, I thought the point was that even an S&P-500 fund will suck some money away from you through fees. I wonder at which point it makes most sense to dump th

Well, I thought the point was that even an S&P-500 fund will suck some money away from you through fees. I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead.

jcdavis 14y ago
ETFs charge fees too - Vanguard's Admiral Total Stock Market Fund charges a 0.05% fee, which is going to be smaller or comparable than almost any ETF (their comparable ETF also has a 0.05% fee), and certainly far lower than the index funds available in most 401(k) plans
hkmurakami 14y ago
>I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead. At any given point in time, an ETF will have the lowest fees compared to other options (mutual fund, professional money management fund, etc). There is no "breaking point" in which it makes sense to switch. If given your parameters, investment objectives and desired sector exposure tell you that an ETF and another option are possible, then at least from a "fee" perspective, it always makes sense to go with the ETF.
- tunesmith 14y ago
  Yeah... I've been following a sector-balanced mutual fund approach (10-12 funds from different sectors), rebalancing quarterly. Upon checking my funds (Fidelity funds, fidelity member), while no-load, they seem to each be around 1% in total in fees. There are enough ETFs that I bet I could probably swap them all out for ETFs that are in the same sectors and maybe make an extra percent a year.
  - hkmurakami 14y ago
    spdr has etfs for all sectors. xlk, xle, xlf, spy, etc.
- p1mrx 14y ago
  ETFs are different, not strictly better. Given an ETF and mutual fund with the same expense ratio, the choice is simply a matter of preference. An ETF allows you to buy/sell at any time throughout the day, while a mutual fund lets you buy fractional shares, and make atomic transfers to other funds. ETFs have a bid/ask spread, while mutual funds trade at the day's closing price. If you do frequent trading, then ETFs are the obvious choice (but frequent trading is generally a good way to lose money.)
  - AjithAntony 14y ago
    It may depend on the funds, but for both the fidelity and vanguard index funds, there are no transaction fees to buy (at least in an IRA in their respective accounts). If I were to make the same periodic investments via ETF, then I'd be paying a commission on each purchase.
    - hkmurakami 14y ago
      the wells Fargo PMA account gives you 85 trades/yr for free (min acct balance of $35k) so that is enough trades for most people

Well, I thought the point was that even an S&P-500 fund will suck some money away from you through fees. I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead.

jcdavis 14y ago

ETFs charge fees too - Vanguard's Admiral Total Stock Market Fund charges a 0.05% fee, which is going to be smaller or comparable than almost any ETF (their comparable ETF also has a 0.05% fee), and certainly far lower than the index funds available in most 401(k) plans

hkmurakami 14y ago

>I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead. At any given point in time, an ETF will have the lowest fees compared to other options (mutual fund, professional money management fund, etc). There is no "breaking point" in which it makes sense to switch. If given your parameters, investment objectives and desired sector exposure tell you that an ETF and another option are possible, then at least from a "fee" perspective, it always makes sense to go with the ETF.

tunesmith 14y ago
Yeah... I've been following a sector-balanced mutual fund approach (10-12 funds from different sectors), rebalancing quarterly. Upon checking my funds (Fidelity funds, fidelity member), while no-load, they seem to each be around 1% in total in fees. There are enough ETFs that I bet I could probably swap them all out for ETFs that are in the same sectors and maybe make an extra percent a year.
- hkmurakami 14y ago
  spdr has etfs for all sectors. xlk, xle, xlf, spy, etc.
p1mrx 14y ago
ETFs are different, not strictly better. Given an ETF and mutual fund with the same expense ratio, the choice is simply a matter of preference. An ETF allows you to buy/sell at any time throughout the day, while a mutual fund lets you buy fractional shares, and make atomic transfers to other funds. ETFs have a bid/ask spread, while mutual funds trade at the day's closing price. If you do frequent trading, then ETFs are the obvious choice (but frequent trading is generally a good way to lose money.)
- AjithAntony 14y ago
  It may depend on the funds, but for both the fidelity and vanguard index funds, there are no transaction fees to buy (at least in an IRA in their respective accounts). If I were to make the same periodic investments via ETF, then I'd be paying a commission on each purchase.
  - hkmurakami 14y ago
    the wells Fargo PMA account gives you 85 trades/yr for free (min acct balance of $35k) so that is enough trades for most people