Cost of moving from Mutual Fund to ETF?

Discussion in 'ETFs' started by Gruffalo8013, Feb 3, 2019.

  1. I have a Wells Fargo Mutual Fund account but I want to move it into an ETF account. Is it possible to move it without incurring capital gains tax?
    Or is it cheaper to leave it and just start adding money from now on to the ETF?
    Or does it strictly depend upon the amount already invested in the Mutual Fund?
    Excuse my ignorance I am pretty new at this.
  2. Changing broker/custodian won't incur tax if you can transfer your positions "in kind". Changing from mutual funds to ETF positions will require you to close the MF positions and open new ETFs... will incur tax as appropriate.
    Last edited: Feb 3, 2019
    MoreLeverage likes this.
  3. jharmon


    ETFs and MFs are different instruments with difference expense ratios, distribution schedules and many other factors.

    Firstly, tell us WHY you want to convert to ETF versus leaving it as MF?
    MoreLeverage likes this.
  4. Ditto.

    If a MF and ETF have the same investment objective, the only significant differences are that the MF will have "end of day only" fills, and be limited in their sell options. If that's not an issue for the investor's style, no significant benefit in replacing one with the other. (May be a small difference in long-term performance for B&H investors in that ETFs typically have slightly lower management fees. Fidelity is even doing a "zero management fee" S&P 500 ETF.... as a loss leader to attract biz?)
    Last edited: Feb 3, 2019
    murray t turtle likes this.
  5. ZBZB


    There is an advantage of putting your assets in a margin account though as you can trade other strategies on margin. Is the mutual fund in a margin account?
  6. srinir


    Depends on what type of mutual fund in your wells fargo account. If you have Vanguard mutual fund, then it can be converted to equivalent Vanguard ETF's. Vanguard mutual funds (most but not all) and ETF are interchangeable . I recall, Vanguard owns patent for this and is not possible for other mutual funds offered by other companies.
    MoreLeverage likes this.
  7. Overnight


    Why don't you call Wells Fargo and ask your financial advisor? You should have one assigned to you. If not, speak to them about it.
  8. zdreg


    re: tax issues
    are you familiar with capital gains distributions issues with mutual funds? there are 1.1M citations on google on this general etfs are more tax efficient
    for individuals than mutual funds,
    Last edited: Feb 4, 2019
    murray t turtle likes this.
  9. Don't most people who leave mutual funds for ETFs never go back to them?
    murray t turtle likes this.