Vanguard ETFs versus TD e-series mutual funds (2024)

FAQs

What is the difference between Vanguard and TD E Series ETF? ›

What are Vanguard ETFs? Vanguard ETFs are exchange-traded funds composed of primarily the same basket of equities (often called an “index”) as the TD e-series funds except that they have an even lower MER ranging from 0.09% to 0.35% annually. They are traded through a brokerage (e.g. Questrade).

ETFs and index mutual funds tend to be generally more tax efficient than actively managed funds. And, in general, ETFs tend to be more tax efficient than index mutual funds. You want niche exposure. Specific ETFs focused on particular industries or commodities can give you exposure to market niches.

However, different users might use each company for different reasons. TD Ameritrade has more robust reporting software and is better for people that are making frequent trades. Vanguard is better for buy-and-hold investors and has less real-time information available to users.

Mutual Funds trade at their Net Asset Value (NAV), while ETFs trade at the prevailing market price at the time of execution. This price may be slightly higher or lower than the underlying NAV and should be factored into the total cost of ownership of an ETF.

The administrative costs of managing ETFs are commonly lower than those for mutual funds. ETFs keep their administrative and operational expenses down through market-based trading. Because ETFs are bought and sold on the open market, the sale of shares from one investor to another does not affect the fund.

ETFs offer numerous advantages including diversification, liquidity, and lower expenses compared to many mutual funds. They can also help minimize capital gains taxes. But these benefits can be offset by some downsides that include potentially lower returns with higher intraday volatility.

ETFs are generally lower than those that are charged by actively managed mutual funds because their managers are merely mimicking the contents of an index rather than making regular buy and sell decisions, For some investors, the design of a passive ETF is a negative.

For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.

Vanguard's charting capabilities are limited, and there's no technical analysis. Conversely, TD Ameritrade offers advanced charting tools that should be more than adequate for most retail investors and traders. Overall, TD Ameritrade offers more versatile account and research amenities.

Is it cheaper to buy Vanguard funds through Vanguard? ›

Vanguard Brokerage doesn't charge additional fees for a purchase, a sale, or an exchange of any load mutual fund offered through our program. You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions).

Vanguard is owned by its funds, which in turn, are owned by their shareholders. With no other parties to answer to and therefore no conflicting loyalties, Vanguard makes decisions, including the decision to keep investing costs as low as possible, with clients' interests in mind.

If you're paying fees for a fund with a high expense ratio or paying too much in taxes each year because of undesired capital gains distributions, switching to ETFs is likely the right choice. If your current investment is in an indexed mutual fund, you can usually find an ETF that accomplishes the same thing.

ETFs have transparent and hidden fees as well—there are simply fewer of them, and they cost less. Mutual funds charge their shareholders for everything that goes on inside the fund, such as transaction fees, distribution charges, and transfer-agent costs.

While they can be actively or passively managed by fund managers, most ETFs are passive investments pegged to the performance of a particular index. Mutual funds come in both active and indexed varieties, but most are actively managed. Active mutual funds are managed by fund managers.

Whether you're aggressive, balanced or conservative as an investor, these exchange-traded funds pack a low-cost, fully diversified portfolio in a single product. A recent change made to TD Asset Management's ETF lineup makes them even more appealing.

Vanguard is the best option for investors who are ready to build an investment portfolio and who can regularly contribute at least $500 per month to their investments. In other words, Vanguard is ideal for a long-term, buy-and-hold investor who won't be trading frequently. E*TRADE is best for frequent traders.

Vanguard maintains multiple agreements with firms such as TD Ameritrade, E-Trade, and Interactive Brokers. As a result, most major brokerages offer their retail clients the opportunity to trade Vanguard mutual funds and exchange-traded funds (ETFs).