Link is to the Bogleheads forum post where someone posted a link back in August. Before now, you had to call in to request the change, and it could take a few days, but now it’s online and allegedly is done the next day.
I don’t know when they added this, but I think it was sometime this year because I remember considering it last EOY (that’s when I usually rebalance).
Here is a direct link, or you can get there on the website: Transact > Buy & Sell > Convert Vanguard mutual funds to ETFs. You can select either a number of shares or a percent of the total position.
As to why you may want to do this, here are a few reasons:
- converting shares classes isn’t a taxable event (but you can’t go ETF -> mutual fund)
- ETFs have a slighly lower ER (0.01-0.02% in most cases, so not huge)
- easier if you want to ACATS transfer shares to a different brokerage
- if you have a mix of ETFs and mutual funds, rebalancing between ETFs is easier, so moving a portion of your mutual funds to ETFs may be worthwhile
Have you taken advantage of Vanguard’s mutual fund -> ETF conversion? Do you think you’ll use this new online tool?
I’m planning on doing this sometime before EOY. I recently bought some small-value ETFs (AVUV and AVDV) in my tax-advantaged accounts and am considering expanding my small-value tilt, and selling mutual funds and waiting until the next day to buy ETFs is a bit of a hassle. I’m also considering moving my taxable assets to Fidelity because they have YTD tax figures, which I haven’t been able to find in Vanguard, and I like to estimate my taxes around EOY to decide on any tax moves I want to do (I often do a Roth conversion around EOY from my old 401k rollover).
I’m going to keep a portion in the mutual fund for automatic investments, but I’ll probably convert the bulk of it.
Vanguard shows YTD realized gains/losses and dividends. They also publish a report estimating percentage of qualified dividends near the end of each year. Not sure what else you would need.
Under “Year-to-date activity” in “Tax forms & information,” I just see “Dividends & interest,” which seems to lump qualified and non-qualified dividends together. I can estimate it w/ prior year info since I only have one fund in my taxable account, but it’s not particularly helpful w/ tax planning.
Fidelity breaks it down by qualified and non-qualified dividends, but I’m not sure if it’s correct since I only have MMFs there (which are all ordinary income on fed taxes IIRC). I’ve been thinking of moving my taxable assets to Fidelity partially to get better YTD tax info, but also to consolidate accounts (Fidelity has my HSA, e-fund, and “checking” already).
What neither seems to offer is a consolidated view across accounts of my YTD tax picture. I want to know:
The last one is especially important because I plan to realize income on Roth conversions at EOY depending on what my taxable income is since I’d really rather not jump into a higher bracket than expected on those conversions.
I currently manage this in a spreadsheet, which is overly complicated and which I’d honestly prefer to scrap. They gather all this info for EOY tax forms, so surely they can generate it before then…
I can see where you’re coming from. Those year-end distributions don’t give you much time before the 12/31 conversion deadline.
To be fair, the “penalty” for miscalculating it isn’t huge, but it is annoying.