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mommie Vangurad keeping snowflakes safe No more inverse ETFs
Vanguard makes another move to keep investors from thinking for themselves. How can they call themselves a brokerage firm when they limit what you can trade.? Pretty soon it will be only passive funds and ETFs. Everyone knows the market is always right.
You must never, never, post a link at MFO without first wasting time to seeing if Ted has posted it previously. Otherwise he will *always* jump in to remind you and everyone that OMG HE POSTED IT FIRST -- with the implication that you have grievously transgressed an unforgivable sin. (If ever caught in that situation, we've learned to just ignore such whining.)
@rforno: Common courtesy isn't a waste of time. There is nothing worse that opening a link and finding it's the same article as a previous poster has link. Your comments rforno are nothing but whining. Go back to M* and stay there !!!
I was hoping to start a discussion on the role brokerage platforms should play in their client’s investing and risk management, but apparently only re-ignited a feud. This board would be much more useful if the posts and comments were limited to substantial opinions and ideas about investments, not digs, priority claims and posts about sports or even politics, unless they relate to investing.
Ted, you must agree that there are an enormous number of things worse in the world and even on the internet than opening a link that has previously been posted. My comments about the link indicated what it was about, and anyone who already had seen it didn’t need to bother with it.
Ted disrupts a thread needlessly to stroke his delicate ego, and yet it's my fault. Go figure.
To the OP, I think VG is overreaching on this in the name of investor protection. If they outlaw 2 or 3-x inverse funds, I can understand that since they are truly dangerous in unenlightened hands .... but to prohibit non-leveraged ETFs like SH to retail investors I think is a bit of an overreach and well into the realm of nursemaiding.
There is nothing worse that opening a link and finding it's the same article as a previous poster has link (sic).
To the contrary, there is nothing better than opening a thread and finding a previously linked article accompanied by some added personal introspection provided by the poster. Links into infinity without any personal introspection by the sponsor are empty links - a dime a dozen - easily pulled up by anybody who’s ever heard of Google. But the same link(s) with some personal introspection / commentary (as sma3 included) are very valuable and can be found nowhere else but on a quality discussion board with active participants.
@Ted, the link from sma3 is not “the same” as whatever you posted. Why? One can be 99% certain that whatever you posted was accompanied only by a verbatum cut & paste from the linked article. sma3’s is superior to yours because of the commentary he took the time and trouble to add.
I agree with @hank, and would go even further. What @sma3 did was put up a subject for discussion - trading policies and product offerings of brokerages. While it was obviously motivated by Vanguard's new policy, it's a different subject. Linking to the Vanguard policy provides context, as opposed being the topic itself.
[I]nverse E.T.F.s are designed to function as a very short-term trading strategy ... "These funds are built for short-term speculation. They’re designed to be outliers." ... “This is trading, not investing,”
While the article is exclusively about inverse funds, the comments apply as well to what Vanguard is calling leveraged funds as well.
The reason why I say "what Vanguard is calling" is that Vanguard is not ending sales of funds that use leverage. It sells a variety of funds that use leverage as a fundamental portion of their investing strategy. (Just check for "leveraging risk" in many funds' prospectuses.) It's not leveraging per se that Vanguard is balking at, but the fact that these funds are inherently short term investments.
Fidelity also puts up a barrier to trading funds it considers risky, such as VMNFX. You my need to attest that you are a sophisticated investor. Apparently, money alone doesn't talk loudly enough. http://personal.fidelity.com/accounts/pdf/dia.pdf
Another form of barrier or limit is cost. For example, TDA used to sell Vanguard ETFs at no charge. They changed their policy to limit the amount of services they were giving away "for free". In contrast, Vanguard imposes no such economic barrier on the ETFs it sells.
Although TD promoted the new NTF platform’s increase from 100 to “250+” ETFs as an increase in consumer choice, the move marked the defeat of truly open architecture for ETFs.
To whatever extent the "nanny" complaint has merit, it could have been raised when Vanguard first went NTF on most ETFs:
We exclude them for a good reason. Leveraged and inverse ETFs are intentionally designed to be bought and sold within a single trading day, making them extremely speculative in nature. We—and the vast majority of the Vanguard community—prefer to think long-term. It's as simple as that!
You can still buy and sell leveraged and inverse ETFs in your Vanguard Brokerage Account. You'll simply pay the same commissions as you would to trade individual stocks.
@msf you make some valid points. If an investor wants to use inverse funds, they can always move to another brokerage, which indeed is the free-market at work.
Comments
Regards,
Ted
https://www.mutualfundobserver.com/discuss/discussion/46846/vanguard-to-end-purchases-of-leveraged-and-inverse-funds-on-its-platform#latest
You must never, never, post a link at MFO without first wasting time to seeing if Ted has posted it previously. Otherwise he will *always* jump in to remind you and everyone that OMG HE POSTED IT FIRST -- with the implication that you have grievously transgressed an unforgivable sin. (If ever caught in that situation, we've learned to just ignore such whining.)
Ted, you must agree that there are an enormous number of things worse in the world and even on the internet than opening a link that has previously been posted. My comments about the link indicated what it was about, and anyone who already had seen it didn’t need to bother with it.
Ted disrupts a thread needlessly to stroke his delicate ego, and yet it's my fault. Go figure.
To the OP, I think VG is overreaching on this in the name of investor protection. If they outlaw 2 or 3-x inverse funds, I can understand that since they are truly dangerous in unenlightened hands .... but to prohibit non-leveraged ETFs like SH to retail investors I think is a bit of an overreach and well into the realm of nursemaiding.
@Ted, the link from sma3 is not “the same” as whatever you posted. Why? One can be 99% certain that whatever you posted was accompanied only by a verbatum cut & paste from the linked article. sma3’s is superior to yours because of the commentary he took the time and trouble to add.
In that spirit, I link to a NYTimes article discussing how inverse funds are specifically designed for short term trading.
https://mutualfundobserver.com/discuss/discussion/46922/some-funds-win-when-others-lose-but-when-the-others-win#latest While the article is exclusively about inverse funds, the comments apply as well to what Vanguard is calling leveraged funds as well.
The reason why I say "what Vanguard is calling" is that Vanguard is not ending sales of funds that use leverage. It sells a variety of funds that use leverage as a fundamental portion of their investing strategy. (Just check for "leveraging risk" in many funds' prospectuses.) It's not leveraging per se that Vanguard is balking at, but the fact that these funds are inherently short term investments.
Other brokerages also limit short term trading. Perhaps not as severely, but if the test is whether they impose any limits, most do. For example, Fidelity will shut down a customer's Fidelity fund trading if the customer trades too often:
http://personal.fidelity.com/products/trading/Trading_Platforms_Tools/excessive_trading_policies.shtml
Fidelity also puts up a barrier to trading funds it considers risky, such as VMNFX. You my need to attest that you are a sophisticated investor. Apparently, money alone doesn't talk loudly enough.
http://personal.fidelity.com/accounts/pdf/dia.pdf
Another form of barrier or limit is cost. For example, TDA used to sell Vanguard ETFs at no charge. They changed their policy to limit the amount of services they were giving away "for free". In contrast, Vanguard imposes no such economic barrier on the ETFs it sells.
Barron's, The Latest Casualty in the ETF Fee War—Objective Advice
https://www.barrons.com/articles/the-latest-casualty-in-the-etf-fee-warobjective-advice-1518840543
(Did Ted link to this one also? Who knows? I'm citing it, not using it to start a thread.) To whatever extent the "nanny" complaint has merit, it could have been raised when Vanguard first went NTF on most ETFs: https://personal.vanguard.com/web/cf/multivariate/experiments/etf/index.html
(Click on "Which ETFs are and aren't commission-free" - this link will surely vanish when Vanguard stops selling leveraged ETFs altogether.)
Isn't that the free market at its best? Brokerages differentiating themselves to appeal to different market segments.
@msf you make some valid points. If an investor wants to use inverse funds, they can always move to another brokerage, which indeed is the free-market at work.