Fund Comparison

The Vanguard 500 Index Fund (Admiral Shares) (symbol VFIAX) and the Vanguard 500 Index Fund (Investor Shares) (symbol VFINX) are two of the largest and most popular S&P 500 index funds. Some compare VFIAX vs VFINX not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VFIAX and VFINX are different share classes of the same portfolio. VFINX is closed to new investors, so it is not possible to buy unless you already own VFINX.

If you already own VFINX and are considering buying more, the decision to buy VFINX or VFIAX depends on investor-specific factors (some of which are listed below). Additionally, Vanguard allows owners of many Investor Shares to convert their shares to Admiral Shares or ETF shares.

If you do not own VFINX, then both VFIAX and VOO (the ETF share class) are options.

The Longer Answer

Vanguard offers multiple shares classes for many funds. The Investor Shares are being phased out and Vanguard is pushing the Admiral Shares and the ETFs now. In other words, VFIAX and VFINX are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VFIAX vs VFINX

VFINX was launched back 1976, while VFIAX was launched on November 13, 2000. Since that time, performance has been nearly identical: 6.74 vs 6.85% annually. Despite changes in fees and expenses over the past 22 years, the cumulative difference in performance over that time period is only 9%! Looking at the chart of VFIAX vs VFINX below, it is obvious that they are identical.

Differences Between VFIAX and VFINX

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating differences, but that is incorrect because they are the same fund!

Factors to Consider

Expenses

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s Investor Shares differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ratio do not matter that much. In this case, the difference in annualized performance is equal to the difference in expense ratio. Since these funds are identical, I would most likely lean towards VFIAX although getting the allocation is more important than selecting the “right” fund.

Transaction Costs

Neither fund charges purchase or redemption fees, so they should be free to trade at Vanguard. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VFIAX or VFINX. However, there will likely be a cost to buy or sell on other platforms.

Investors planning smaller allocations or expecting a lot of transactions may want to consider VOO, the ETF share class of this strategy.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, both VFIAX and VFINX benefit from VOO’s tax-efficient mechanisms.

Both VFINX and VFIAX made capital gains distributions prior to VFIAX’s launch in 2000, although it has not made a capital gains distributions since then (and VFIAX has never made a cap gains distribution)! In other words, VFINX and VFIAX are equivalent in terms of tax efficiency.

Tax Loss Harvesting

Investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

As mentioned above, VFINX is closed to new investors. So unless you already own VFINX, you may want to consider VFIAX or VOO.

VFIAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position.

The minimum purchase size for VOO is typically one share, although fractional shares are becoming more common. Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VFIAX vs VFINX

VFIAX and VFINX are literally the same. However, investors should consider the above factors when deciding which one is best for them (if they are able to buy VFINX at all).

The Vanguard Communication Services Index Fund (Admiral Shares) (symbol VTCAX) and the Vanguard Communication Services ETF (symbol VOX) are two of the largest and most popular communication services sector index funds. Some compare VTCAX vs VOX not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VTCAX and VOX are different share classes of the same portfolio, which is made possible by Vanguard’s ETF share class structure. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VTCAX and VOX are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VTCAX vs VOX

VOX was launched on September 23, 2004, while VTCAX was launched on March 11, 2005. Since the common inception date (the latter of the two inception dates), performance has been nearly identical: 5.13% vs 5.16% annually. Despite changes in fees and expenses over this time period, there is only about a one percent difference in cumulative performance since inception! Looking at the chart of VTCAX vs VOX below, it is obvious that they are identical.

Differences Between VTCAX and VOX

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s ETFs differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ration do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat infinitesimally small differences (and they’ll show up in net performance anyways).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VTCAX or VOX. However, only VOX is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .05% for VOX and individual investor trades will not generally be large enough to “move” the market. In the case of VOX, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VOX is able to extend its tax benefits to VTCAX. A more in-depth explanation of Vanguard mutual fund tax-efficiency can be found here.

VTCAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VOX is more tax-efficient than VTCAX, but this incorrect as neither fund has ever made a capital gains distribution.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VTCAX. If all ETFs, I might lean more towards VOX.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VTCAX does have a stated minimum initial purchase of $100,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VOX is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VTCAX vs VOX

VTCAX and VOX are literally the same. However, investors should consider the above factors when deciding which one is best for them.

The Vanguard Emerging Markets Bond Index Fund (Admiral Shares) (symbol VBLAX) and the Vanguard Emerging Markets Government Bond ETF (symbol BLV) are two of the largest and most popular bond index funds. Some compare VBLAX vs BLV not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VBLAX and BLV are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VBLAX and BLV are not two funds pursuing an identical strategy; they are the same fund! Read more about Vanguard’s share class structure and the potential benefits.

Historical Performance: VBLAX vs BLV

BLV was launched on April 3, 2007, while VBLAX was launched on launched on February 7, 2019. Since then, performance has been very similar: -1.07% vs -1.23% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is less than 1%. Looking at the chart of VBLAX vs BLV below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VBLAX vs BLV during the first half of 2020. BLV declined over 23% (peak-to-trough), while VBLAX “only” declined about 20%. Remember, these are simply different share classes of the exact same fund! However, BLV trades at a market price and VBLAX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the BLV value was closer to value of the underlying portfolio than the VBLAX NAV. Interestingly, holders of VBLAX could have sold their holdings and rotated into BLV (which is the exact same portfolio) at a substantial discount.

Differences Between VBLAX and BLV

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VBLAX or BLV. However, only BLV is free to trade in non-Vanguard accounts.

Unfortunately, Vanguard does charge a .50% fee on purchases of VBLAX, no matter where the account is held. So investors should consider whether their allocation will be a one-time purchase or averaged in over time, as that may help them determined whether the mutual fund or ETF is a better choice.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .11% for BLV and individual investor trades will not generally be large enough to “move” the market. In the case of BLV, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, BLV is able to extend its tax benefits to VBLAX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Neither VBLAX nor BLV have made a capital gains distributions in the past. I noticed some posts on the internet saying that BLV is more tax-efficient than VBLAX, but this incorrect.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VBLAX. If all ETFs, I might lean more towards BLV.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VBLAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for BLV is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VBLAX vs BLV

VBLAX and BLV are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Small-Cap Growth Index Fund (Admiral Shares) (symbol VSGAX) and the Vanguard Small-Cap Growth ETF (symbol VBK) are two of the largest and most popular small-cap growth index funds. Some compare VSGAX vs VBK not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VSGAX and VBK are different share classes of the same portfolio, which is made possible by Vanguard’s ETF share class structure. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VSGAX and VBK are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VSGAX vs VBK

VBK was launched on January 26, 2004, while VSGAX was launched on September 27, 2011. Since the common inception date (the latter of the two inception dates), performance has been nearly identical: 10.52% vs 10.51% annually. Despite changes in fees and expenses over this time period, there is less than a .6% percent difference in cumulative performance since inception! Looking at the chart of VSGAX vs VBK below, it is obvious that they are identical.

Differences Between VSGAX and VBK

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s ETFs differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ration do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat infinitesimally small differences (and they’ll show up in net performance anyways).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VSGAX or VBK. However, only VBK is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .08% for VBK and individual investor trades will not generally be large enough to “move” the market. In the case of VBK, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VBK is able to extend its tax benefits to VSGAX. A more in-depth explanation of Vanguard mutual fund tax-efficiency can be found here.

VSGAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VBK is more tax-efficient than VSGAX, but this incorrect as neither fund has ever made a capital gains distribution.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VSGAX. If all ETFs, I might lean more towards VBK.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VSGAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VBK is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VSGAX vs VBK

VSGAX and VBK are literally the same. However, investors should consider the above factors when deciding which one is best for them.

The Vanguard European Stock Index Fund (Admiral Shares) (symbol VEUSX) and the Vanguard FTSE Europe ETF (symbol VGK) are two of the largest and most popular Europe-focused index funds. Some compare VEUSX vs VGK not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VEUSX and VGK are different share classes of the same portfolio, which is made possible by Vanguard’s ETF share class structure. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VEUSX and VGK are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VEUSX vs VGK

VGK was launched on March 4, 2005, while VEUSX was launched on August 13, 2001. Since the common inception date (the latter of the two inception dates), performance has been nearly identical: 4.21% vs 4.25% annually. Despite changes in fees and expenses over this time period, there is only about a half percent difference in cumulative performance since inception! Looking at the chart of VEUSX vs VGK below, it is obvious that they are identical.

Differences Between VEUSX and VGK

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s ETFs differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ration do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat infinitesimally small differences (and they’ll show up in net performance anyways).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VEUSX or VGK. However, only VGK is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .02% for VGK and individual investor trades will not generally be large enough to “move” the market. In the case of VGK, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VGK is able to extend its tax benefits to VEUSX. A more in-depth explanation of Vanguard mutual fund tax-efficiency can be found here.

VEUSX has never paid a capital gain distribution! I noticed some posts on the internet saying that VGK is more tax-efficient than VEUSX, but this incorrect as neither fund has ever made a capital gains distribution.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VEUSX. If all ETFs, I might lean more towards VGK.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VEUSX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VGK is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VEUSX vs VGK

VEUSX and VGK are literally the same. However, investors should consider the above factors when deciding which one is best for them.

The Vanguard Long-Term Corporate Bond Index Fund (Admiral Shares) (symbol VLTCX) and the Vanguard Long-Term Corporate Bond ETF (symbol VCLT) are two of the largest and most popular corporate bond index funds. Some compare VLTCX vs VCLT not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VLTCX and VCLT are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VLTCX and VCLT are not two funds pursuing an identical strategy; they are the same fund! Read more about Vanguard’s share class structure and the potential benefits.

Historical Performance: VLTCX vs VCLT

Both VCLT and VLTCX were launched in late 2009. Not surprisingly, performance has been nearly identical since their common inception date: 4.47% vs 4.56% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is just under 2%! Looking at the chart of VLTCX vs VCLT below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VLTCX vs VCLT during the first half of 2020. VCLT declined over 30% (peak-to-trough), while VLTCX “only” declined about 25%. Remember, these are simply different share classes of the exact same fund! However, VCLT trades at a market price and VLTCX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the VCLT value was closer to value of the underlying portfolio than the VLTCX NAV. Interestingly, holders of VLTCX could have sold their holdings and rotated into VCLT (which is the exact same portfolio) at a substantial discount.

Differences Between VLTCX and VCLT

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VLTCX or VCLT. However, only VCLT is free to trade in non-Vanguard accounts.

Unfortunately, Vanguard does charge a 1% fee on purchases of VLTCX, no matter where the account is held. So investors should consider whether their allocation will be a one-time purchase or averaged in over time, as that may help them determined whether the mutual fund or ETF is a better choice.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .06% for VCLT and individual investor trades will not generally be large enough to “move” the market. In the case of VCLT, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VCLT is able to extend its tax benefits to VLTCX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VLTCX and VCLT have made a capital gains distributions in the past. I noticed some posts on the internet saying that VCLT is more tax-efficient than VLTCX, but this incorrect.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VLTCX. If all ETFs, I might lean more towards VCLT.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VLTCX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VCLT is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VLTCX vs VCLT

VLTCX and VCLT are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Emerging Markets Bond Index Fund (Admiral Shares) (symbol VGAVX) and the Vanguard Emerging Markets Government Bond ETF (symbol VWOB) are two of the largest and most popular emerging market bond funds. Some compare VGAVX vs VWOB not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VGAVX and VWOB are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VGAVX and VWOB are not two funds pursuing an identical strategy; they are the same fund! Read more about Vanguard’s share class structure and the potential benefits.

Historical Performance: VGAVX vs VWOB

Both VWOB and VGAVX was launched on launched on May 31, 2013. Not surprisingly, performance has been nearly identical since that time: 1.73% vs 1.81% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is just under 1%! Looking at the chart of VGAVX vs VWOB below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This is clear if we chart VGAVX vs VWOB during the first half of 2020. VWOB declined over 25% (peak-to-trough), while VGAVX “only” declined about 20%. Remember, these are simply different share classes of the exact same fund! However, VWOB trades at a market price and VGAVX is traded at a NAV.

This is caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the VWOB value was closer to value of the underlying portfolio than the VGAVX NAV. Interestingly, holders of VGAVX could have sold their holdings and rotated into VWOB (which is the exact same portfolio) at a substantial discount.

Differences Between VGAVX and VWOB

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VGAVX or VWOB. However, only VWOB is free to trade in non-Vanguard accounts.

Unfortunately, Vanguard does charge a .25% fee on purchases of VGAVX, no matter where the account is held. So investors should consider whether their allocation will be a one-time purchase or averaged in over time, as that may help them determined whether the mutual fund or ETF is a better choice.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .1% for VWOB and individual investor trades will not generally be large enough to “move” the market. In the case of VWOB, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VWOB is able to extend its tax benefits to VGAVX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VGAVX and VWOB have made a capital gains distributions in the past. I noticed some posts on the internet saying that VWOB is more tax-efficient than VGAVX, but this incorrect.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VGAVX. If all ETFs, I might lean more towards VWOB.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VGAVX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VWOB is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VGAVX vs VWOB

VGAVX and VWOB are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility. If two options provide the same risk and return, but one does not have periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Total World Stock Index Fund (Admiral Shares) (symbol VTWAX) and the Vanguard Total World Stock ETF (symbol VT) are two of the largest and most popular world index funds. Some compare VTWAX vs VT not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VTWAX and VT are different share classes of the same portfolio, which is made possible by Vanguard’s ETF share class structure. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VTWAX and VT are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VTWAX vs VT

VT was launched on June 24, 2008, while VTWAX was launched many years later on February 2, 2019. Since that time, performance has been nearly identical to VTWAX: 7.60% vs 7.58% annually. Despite changes in fees and expenses over this time period, there is only a .1% difference in cumulative performance since inception! Looking at the chart of VTWAX vs VT below, it is obvious that they are identical.

Differences Between VTWAX and VT

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s ETFs differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ration do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat infinitesimally small differences (and they’ll show up in net performance anyways).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VTWAX or VT. However, only VT is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .01% for VT and individual investor trades will not generally be large enough to “move” the market. In the case of VT, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VT is able to extend its tax benefits to VTWAX. A more in-depth explanation of Vanguard mutual fund tax-efficiency can be found here.

VTWAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VT is more tax-efficient than VTWAX, but this incorrect as neither fund has ever made a capital gains distribution.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VTWAX. If all ETFs, I might lean more towards VT.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VTWAX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VT is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VTWAX vs VT

VTWAX and VT are literally the same. However, investors should consider the above factors when deciding which one is best for them.

The Vanguard Intermediate-Term Treasury Index Fund (Admiral Shares) (symbol VSIGX) and the Vanguard Intermediate-Term Treasury ETF (symbol VGIT) are two of the largest and most popular Treasury index funds. Some compare VSIGX vs VGIT not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VSIGX and VGIT are different share classes of the same portfolio. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VSIGX and VGIT are not two funds pursuing an identical strategy; they are the same fund! Read more about Vanguard’s share class structure and the potential benefits.

Historical Performance: VSIGX vs VGIT

Both VGIT and VSIGX were launched in late 2009. Perhaps not surprisingly, performance has been nearly identical since their common inception date: 1.81% vs 1.79% annually. Despite changes in fees and expenses over that time period, the cumulative difference in performance over that time period is only about 20 basis points! Looking at the chart of VSIGX vs VGIT below, it is obvious that they are identical.

Risks of Fixed-Income ETFs

One of the risks of fixed-income ETFs is that they trade well below their net asset value (NAV) in times of distress. This occurred with many bond funds during the covid crisis, including some of Vanguard’s flagship bond funds. Interestingly, this is not what occurred with VGIT during that time. The below chart shows that VGIT began trading at a premium to VSIGX. Remember, these are simply different share classes of the exact same fund! However, VGIT trades at a market price and VSIGX is traded at a NAV.

These deviations are generally caused by the fact that fixed-income typically trades at wide bid-ask spreads, which widen even further during market volatility. Sometimes the bids will disappear altogether. Mutual funds generally publish a NAV based on market prices (or estimated values for fixed-income), so estimating a NAV is difficult if the market freezes or bids disappear, although that does not appear to be the case with these two funds in March 2020.

The consensus is that ETFs provide better “price discovery” than mutual funds, since ETFs represent actual market prices. In this example, it is widely assumed that the VGIT value was closer to value of the underlying portfolio than the VSIGX NAV. Interestingly, holders of VGIT could have sold their holdings and rotated into VSIGX (which is the exact same portfolio) at a slight discount.

Differences Between VSIGX and VGIT

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VSIGX or VGIT. However, only VGIT is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .02% for VGIT and individual investor trades will not generally be large enough to “move” the market. In the case of VGIT, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VGIT is able to extend its tax benefits to VSIGX.

One additional consideration is that fixed-income ETFs are not quite as tax-efficient as equity ETFs. Both VSIGX and VGIT have made a capital gains distributions in the past. I noticed some posts on the internet saying that VGIT is more tax-efficient than VSIGX, but this incorrect.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VSIGX. If all ETFs, I might lean more towards VGIT.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VSIGX does have a stated minimum initial purchase of $3,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VGIT is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VSIGX vs VGIT

VSIGX and VGIT are literally the same portfolio. However, I personally shy away from fixed-income ETFs due to their tendency to trade below NAV during episodes of extreme volatility (even though that was not the case with VGIT and VSIGX during the covid crisis). If two options provide the same risk and return, but one does not have a higher risk of periodic blowups then I’ll go with that one. Of course, there are other factors to consider (such as the above).

The Vanguard Industrials Index Fund (Admiral Shares) (symbol VINAX) and the Vanguard Industrials ETF (symbol VIS) are two of the largest and most popular industrial sector index funds. Some compare VINAX vs VIS not realizing that they are just two different share classes of the same portfolio.

A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.

The Short Answer

VINAX and VIS are different share classes of the same portfolio, which is made possible by Vanguard’s ETF share class structure. The decision to buy one or the other depends on investor-specific factors (some of which are listed below).

The Longer Answer

Vanguard ETFs are structured as share classes of their mutual funds. This is a patented structure that is scheduled to expire in 2023, so we may see this structure more frequently in the near future. In other words, VINAX and VIS are not two funds pursuing an identical strategy; they are the same fund!

Historical Performance: VINAX vs VIS

VIS was launched on September 23, 2004, while VINAX was launched on May 8, 2005. Since the common inception date (the latter of the two inception dates), performance has been nearly identical: 9.06% vs 9.11% annually. Despite changes in fees and expenses over this time period, there is only about a four percent difference in cumulative performance since inception! Looking at the chart of VINAX vs VIS below, it is obvious that they are identical.

Differences Between VINAX and VIS

Since the two funds are actually two share classes of the same fund, I will skip the usual comparisons here. The geographic exposures, sector weights, market cap coverage so on is identical because the two funds are shares in the same portfolio. There are some resources on the internet indicating otherwise, but these are incorrect.

Some investors may point out that the expense ratios between Vanguard’s Admiral Shares and Vanguard’s ETFs differ. This is true, but it is also reflected in the net performance chart above. At a certain level, differences in expense ration do not matter. A small absolute difference (in basis points) is essentially meaningless (even if it appears large on a percentage basis) and is often smaller than the bid-ask spread (see transaction costs below). Expenses do matter, but I would not sweat infinitesimally small differences (and they’ll show up in net performance anyways).

Factors to Consider

Transaction Costs

ETFs are free to trade at many brokers and custodians, including Vanguard. However, many brokers and custodians still charge commissions and/or transaction fees to buy/sell mutual funds. To my knowledge, Vanguard does not participate in the pay-to-play arrangements that would allow their mutual funds to trade for free on many platforms. So if an investor account is at Vanguard, it is free to trade VINAX or VIS. However, only VIS is free to trade in non-Vanguard accounts.

There is a bid-ask spread when trading ETFs, but this spread is typically less than .05% for VIS and individual investor trades will not generally be large enough to “move” the market. In the case of VIS, individual investors should not have a problem trading.

Tax Efficiency & Capital Gain Distributions

ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). However, since Vanguard ETFs are a share class of their mutual funds, the mutual funds are able to benefit from this feature of the ETF. In other words, VIS is able to extend its tax benefits to VINAX. A more in-depth explanation of Vanguard mutual fund tax-efficiency can be found here.

VINAX has never paid a capital gain distribution! I noticed some posts on the internet saying that VIS is more tax-efficient than VINAX, but this incorrect as neither fund has ever made a capital gains distribution.

Tax Loss Harvesting

My personal preference is to keep a portfolio entirely mutual funds or entirely ETFs, due to the mechanics of settlement during tax loss harvesting. If an ETF has declined in value and an investor sells it, the trade and cash proceeds will not settle for two business days (T+2). That investor may want to “replace” the sold ETF immediately and attempt to buy another ETF or mutual fund simultaneously.

However, mutual funds settle on T+1 basis, so cash for the mutual purchase would be due in one business day (which is one day earlier than the cash from the ETF sale is received). This can obviously cause problems and (even though this issue can be addressed with careful planning) I find it easier to keep accounts invested in similar vehicles. In this case, if a portfolio is all mutual funds, I might lean more towards VINAX. If all ETFs, I might lean more towards VIS.

On this topic, investors should probably avoid using these two funds as tax loss harvesting substitutes for one another since they would likely be considered “substantially identical.”

Tradability

VINAX does have a stated minimum initial purchase of $100,000, so that may be a factor for some investors looking to initiate a position. The minimum purchase size for VIS is typically one share, although fractional shares are becoming more common.

Investors can trade ETFs intraday, as well as in the pre-market and after-hours trading sessions. Investors can only buy/sell mutual funds once per day. This is not necessarily a major factor for long-term investors however.

Final Thoughts: VINAX vs VIS

VINAX and VIS are literally the same. However, investors should consider the above factors when deciding which one is best for them.