Earlier this 12 months, I mentioned why I made a decision to transform my Vanguard mutual fund to ETFs. I don’t remorse the choice, and a few of these transportable Vanguard ETFs later went to Robinhood for a $8,000 payday 💰 (that provide is again once more this week…). On the time, the one solution to convert was to name into Vanguard and take heed to a number of disclosures over the telephone. As of late 2024, you possibly can once more convert Vanguard mutual funds to their ETF equal straight on the Vanguard.com brokerage web site.
Nonetheless, the function is considerably hidden, as a seek for “convert mutual funds to ETF” doesn’t give you a helpful reply, even these it comes up as a predicted search request:
Hopefully this fast how-to will spare you some wasted time. After you log in to your Vanguard account, search for the “Transact” menu possibility on the highest search bar. See screenshot. After that, click on on “Purchase & Promote”. (It gained’t present up as an possibility below the “Transact” possibility in different elements of the location.)
After that, you must search for a smaller textual content hyperlink that claims “Convert Vanguard mutual funds to ETFs”.
This could deliver you lastly to the principle conversion web page:
There are some disclosures; I’ve copied them beneath for reference. After that, you’ll find the mutual funds you need to convert. The conversion ought to occur both same-day or next-day. Afterward, I might double-check to ensure your price foundation is carried over correctly.
– Requests acquired previous to the New York Inventory Change shut (often 4 PM EST) will probably be processed that day. Requests after this time will probably be processed the subsequent buying and selling day. Mutual Fund dividend funds at or close to the time of conversion could delay the method.
– An ETF conversion is irreversible – Vanguard ETF shares can’t be transformed again to Vanguard mutual fund shares. When you determine sooner or later to promote your Vanguard ETF shares in an effort to repurchase Vanguard mutual fund shares, that transaction could possibly be taxable in a non-retirement account and fund minimums should be met.
Sure mutual fund account choices won’t apply or will must be reestablished following the conversion (together with some distribution and cash switch choices).– An ETF conversion will probably be processed primarily based on the relative web asset values of the Vanguard mutual fund and the Vanguard ETF.
COST BASIS INFORMATION FOR NON-RETIREMENT ACCOUNTS:
– In case you are not already locked into the typical price technique by a sale, switch, partial conversion or different disposition of your Vanguard mutual fund shares, we’ll have you ever revoke the typical price technique for any eligible shares of Vanguard mutual funds and apply the First In First Out (FIFO) price foundation technique previous to this conversion to the ETF share class.– In case you are already locked into the typical price technique by a sale, switch, partial conversion or different disposition of your Vanguard mutual fund shares, we’ll have you ever exit the typical price technique for any eligible shares of Vanguard mutual funds and apply the FIFO price foundation technique previous to this conversion to the ETF share class. This implies share heaps acquired previous to the conversion will probably be listed individually with the averaged price.
– By clicking submit you conform to convert your mutual fund shares to the ETF share class and are instructing Vanguard to revoke your common price election.
Right here’s what’s contained in the “Study Extra” hyperlink:
– Vanguard Brokerage is required to ship you an ETF prospectus for every mutual fund transformed to an ETF. The prospectuses will probably be despatched based on your mailing preferences.
– There isn’t a charge for Vanguard Brokerage shoppers to transform Vanguard mutual fund shares to Vanguard ETFs of the identical holding.
– Vanguard will apply the IRS default technique of FIFO to ETF holdings. With this technique, the shares you purchased first will robotically be the primary shares relieved.
– In case you are already invested within the ETF share class for the fund to which you might be changing your mutual fund shares, and you’ve got elected a price foundation technique apart from FIFO the shares you obtain as results of this conversion will observe that election.
– In case you are not already invested within the ETF share class for the fund to which you might be changing, Vanguard will apply the default technique of FIFO for brand new ETF shares you obtain because of this conversion. You may choose a special price foundation technique after the conversion.*Noncovered shares: The common price technique will carry over to the ETF for the non-covered shares, however you might be free to report the shares utilizing one other technique in your tax kind. The fee foundation of noncovered shares is distributed to you for informational functions solely and won’t be reported to the IRS by Vanguard. You’re answerable for reporting the sale of noncovered shares.
