Should I switch Total Bond MF to the ETF?

[disneysteve]

I'm working on my ongoing effort to simplify and consolidate our portfolio. Over the past year, we rolled over my wife's 401k and 403b, eliminating 4 funds from our lives. I was just reviewing all of our Vanguard accounts and realized we own 9 different funds with them.

At this point, in different accounts we own both VBTLX, the Total Bond Market Index Fund, and BND, the Total Bond Market ETF. Assuming these are all tax-sheltered accounts so changes do not create taxable events, is there any reason not to convert all of the VBTLX holdings over to BND? These are all static accounts that we are no longer contributing to. Doing this would eliminate one more fund from our portfolio and lower our expenses a tad in the process.

I also realized that in two different accounts, we own two different Vanguard international funds. I'll take a look at those and decide which one to stick with and convert the other over. That will knock another fund off our list.

Updating our spreadsheet, I also noticed that there were 4 funds still on my watch list that we no longer own, so I deleted those.

We sent off the paperwork to donate some appreciated stock to our synagogue. Once that processes, it will knock another item off our list. Little by little, it's gotten a lot better than it was a year ago.

[disneysteve]

The only minor problem would be that the ETF is sold in whole shares so I might end up with a small amount of cash (under $90) remaining uninvested.

[Like2Plan]

The only minor problem would be that the ETF is sold in whole shares so I might end up with a small amount of cash (under $90) remaining uninvested.

DH and I don't own any ETF's currently (I always kind of wish they were ETFs when buying and selling, but so far I haven't done anything about it). How does that work when you receive your dividends? Will they do fractional shares for dividends or do you have a bit of money left over in your sweep account if your dividends don't equal a whole share?

[kork13]

To L2P's question, dividends are distributed as fractional shares. Typically, those fractional shares can will only be sold if the position is fully liquidated -- otherwise, as stated, you can only buy/sell in whole shares.

DS, I'd say there's no reason not to switch. You want to consolidate, BND is effectively identical to what you have, and it's got a slightly lower ER. Because you won't often be buying more, you don't have to worry about the ETF downsides of whole-share transactions and no automatic transactions.

[disneysteve]

DS, I'd say there's no reason not to switch. You want to consolidate, BND is effectively identical to what you have, and it's got a slightly lower ER. Because you won't often be buying more, you don't have to worry about the ETF downsides of whole-share transactions and no automatic transactions.

Thanks. That's what I thought. I just wanted to make sure I wasn't overlooking anything. As I said, the worst that will happen is a small amount will remain in the settlement account but that's insignificant. BND is about $85/share so the most that could be left over is just under that.

[Jluke]

Assume these are held at Vanguard or a company that doesn’t charge for selling vanguard mutual funds?

fidelity charges $75 to buy VG mutual funds. Not sure if they charge to sell since I haven’t done that.

[disneysteve]

Assume these are held at Vanguard or a company that doesn’t charge for selling vanguard mutual funds?

Correct. It's all in Vanguard accounts. That's where about 65% of our portfolio is.