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Opinion: How fund giant Vanguard is misleading investors about a tax on stock trades
A good opinion piece/commentary. It's hard to believe that the small tax as proposed would have the huge scary impact. Somebody needs to come up with a lot more detail. David
Usually when Vanguard shows returns from a high turnover actively managed fund, it does so to show how much better off one would be with one of its low cost, low turnover funds (whether actively or passively managed). Here it is doing somewhat the opposite.
Rather than suggesting that people use lower turnover funds, Vanguard is implying that it's okay to pay a lot in trading costs because of high turnover. Just let's not make it worse by taxing that.
After decades, investors are finally getting wise to the explicit costs of funds (as represented by ERs) and moving toward lower cost funds. Perhaps with a higher transaction tax in place (there's already a small fee assessed on sales), trading costs will become more visible and people will gravitate toward lower turnover funds.
If so, this tax could turn out to actually benefit Main Street investors.
Comments
David
Rather than suggesting that people use lower turnover funds, Vanguard is implying that it's okay to pay a lot in trading costs because of high turnover. Just let's not make it worse by taxing that.
After decades, investors are finally getting wise to the explicit costs of funds (as represented by ERs) and moving toward lower cost funds. Perhaps with a higher transaction tax in place (there's already a small fee assessed on sales), trading costs will become more visible and people will gravitate toward lower turnover funds.
If so, this tax could turn out to actually benefit Main Street investors.