Hi,
I am wondering why (or how) Vanguard is able to offer a lower expense ratio for its total stock market index fund ETF than it does for its mutual fund equivalent.
Here's the pricing information from Vanguard's site:
Vanguard Total Stock Market ETF (VTI)
- Market Price: $149.05
- Premium: $0.02
- Expense Ratio: 0.03%
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
- Price: $72.54
- (No premium/discount, since the price reflects NAV)
- Expense Ratio: 0.04%
I know that they both have rock-bottom low expense ratios, and that it is just one basis point, but I would have expected VTSAX to have a lower expense ratio due to its higher minimum investment ($3,000 for VTSAX vs. $149.05 for one share of VTI).
I understand the difference between mutual funds and ETFs, but why does the ETF have a lower expense ratio? Does it have to do with the $0.02 premium built into VTI? Or, is it all a wash since you can buy partial shares of VTSAX and have more money working for you?
Thanks
Submitted June 27, 2019 at 10:21PM by electricleisure https://ift.tt/31XhkuP
