FYI: Last week’s big story about Vanguard Group’s patented tax dodge raised some interesting legal and tax issues. Our charge today is to try and take a slightly deeper look at what Vanguard has been doing and why.
Let’s start with some basics about the differences between mutual funds and exchange-traded funds, or ETFs. The obvious feature is that open-end mutual funds are priced once a day based on prices at the market close, while ETFs (and closed-end mutual funds) trade all day. This is a remnant of the pre-computer era, when it would have been impossible to get a quote on all of the underlying holdings in any given fund during market hours. If you have to execute buys or sells by hand, then end-of-day pricing data was what you used.
Regards,
Ted
https://www.bloomberg.com/opinion/articles/2019-05-06/vanguard-fund-investors-get-control-of-paying-taxes
