Some Schwab ETFs have lower expense ratios than Vanguard.http://www.marketriders.com/blog/2012/04/20/schwab-could-be-...But here’s the clincher: Schwab is pricing several of its domestic-stock ETFs lower than Vanguard.</snip>intercst
Ahh, but there's much more to ETFs than expense ratio, such as the cost of trading. Because SCHB is less liquid than VTI, the trading costs will be higher.SCHB Bid/Ask 33.39/33.51 => 3.4%VTI Bid/Ask 69.92/70.82 => 1.71%Also, they don't own the same stocks, so the yields don't line up:SCHB SEC Yield = 1.77%VTI SEC Yield = 1.90%
AndrewXnn writes,Ahh, but there's much more to ETFs than expense ratio, such as the cost of trading....I agree. That's why I was surprised to learn that VTI's portfolio turnover at 5% was almost double SCHB's 3%. And you pay for that added portfolio turnover each and every year, while the bid/asked spread is a one-time hit.intercst
Some of the Fidelity Spartan index funds have lower costs than the corresponding Vanguard funds.The catch is that you don't know what they will cost ten years from now since they can change the fees at any time. I suspect that that could be an issue with these RTF's too if you read through the fine print.
The catch is that you don't know what they will cost ten years from now since they can change the fees at any time. isn't that true of any Fund or ETF?and can't brokers change commissions pretty much at whim?
"Ahh, but there's much more to ETFs than expense ratio, such as the cost of trading. Because SCHB is less liquid than VTI, the trading costs will be higher.SCHB Bid/Ask 33.39/33.51 => 3.4%VTI Bid/Ask 69.92/70.82 => 1.71%"If you would take the simple action of trading during theNYSE's trading hours, 9:30-4:00 EST, you will find thatthe bid/ask spread for both of these highly liquid etfsare much lower, typically a penny. Slightly wider spreads may be obtained from 4 to 4:30, etf's have "extendedregular hours" after the main markets close. The worst spreads such as the two you quote are in the "after-hoursmarket". QQQ, SPY, and IVV trade heavily enough after-hours to maintain tight spreads.Still I recommend against off-hourstrades.
>> The catch is that you don't know what they will cost ten years from now since they can change the fees at any time. <<True, but since Schwab isn't charging Schwab customers any trading commission on their in-house ETFs and because changes to these funds and their fee structure are generally communicated in advance, one can easily (and with no cost) move their money if they don't like the new terms. It's not like this is an annuity with an 8% surrender charge...#29
SCHB bid/asked 32.84 32.87 12:50pm .0914% spreadVTI bid/asked 69.98 69.99 12:50pm .01429% spreadAs reported in my last post market spreads for theseetfs are much smaller during market hours thanthose reported by AndrewCM My recollection of SCHB spreads may have beenslightly low now seems to average a 2 penny spreadStill 6 or 9 basis points much lower than 341 bpreported by Andrew
AndrewXnn reported earlier"Ahh, but there's much more to ETFs than expense ratio, such as the cost of trading. Because SCHB is less liquid than VTI, the trading costs will be higher.SCHB Bid/Ask 33.39/33.51 => 3.4%VTI Bid/Ask 69.92/70.82 => 1.71%...."In my first reply to this I reported that this was anafterhours quote and that these etfs trade with muchsmaller spreads while the major US exchanges are open. I also noted that etfs trade in a special "regular" session from 4 to 4:30, with wider spreads. After 4:30is the regular afterhours session.Sample quotes from today's trading12:50 pm All Exchanges openSCHB bid/ask 32.84 32.87 spread 0.0913 %VTI bid/ask 69.98 69.99 spread 0.0143 %Much less costly than the spreads reported by Andrew4:08 pm NYSE closedSCHB bid/ask 32.76 33.93 spread 3.57%VTI bid/ask 70.21 70.23 spread 0.0285%Not a liquid market for SCHBThe next time I trade after 4PM VTI a candidate5:03 pm AfterhoursSCHB bid/ask 32.76 33.94 spread 3.60%VTI bid/ask 70.13 70.94 spread 1.16%These Afterhours spreads are similar to Andrew's results.My apoligies for misspelling AndrewXnn's moniker inthe previous post.
Good points WPatch!Need to be careful about the time of daywhen talking or trading ETF's.Thanks
Schwab will never be Vanguard, because Vanguard hasn't been fined $119 million for fraud.http://www.sec.gov/news/press/2011/2011-7.htmCSIM and CS&Co. agreed to pay a total of $118,944,996, including $52,327,149 in disgorgement of fees by CSIM, a $52,327,149 penalty against CSIM, a $5 million penalty against CS&Co., and pre-judgment interest of $9,290,698. In its order, the Commission found that: CSIM and CS&Co. willfully violated anti-fraud provisions of the Securities Act of 1933, Sections 17(a)(2) and (3). CSIM willfully violated anti-fraud provisions of the Investment Advisers Act of 1940, Section 206(4) and Rule 206(4)-8. Schwab Investments willfully violated Section 13(a) of the Investment Company Act of 1940 by deviating from its concentration policy, and CSIM willfully aided and abetted and caused the violation. CSIM and CS&Co. willfully aided and abetted and caused violations of the false filings provision of the Investment Company Act, Section 34(b). CS&Co. violated Section 15(g) (formerly Section 15(f)) of the Securities Exchange Act of 1934, and CSIM violated Section 204A of the Advisers Act, both of which require policies and procedures that are reasonably designed, taking into consideration the nature of the entities' businesses, to prevent the misuse of material, nonpublic information.
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