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Originally Posted by retiredguy123
Thanks. My stock portfolio consists almost entirely of the S&P 500 Index. Most of it is in the Vanguard S&P 500 index fund. I don't know much about ETFs, but it seems to me that, in the event that a volatile stock market event occurs, it could cause ETF investors to cash in large portions of their ETF investment, which would require the fund manager to sell off many stocks to raise the required cash. This would cause a disruption in the S&P balance and create a large capital gains distribution. I think this is less likely to happen with mutual funds because many investors are buy and hold investors, not active traders. My opinion. But, in any event, my portfolio has so much capital gain built in, that it would be foolish to convert to ETFs.
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Always best to check with your tax advisor about these matters.
Expense ratios for mutual funds are higher than ETF'S. Plus you have to deal with capital gains on mutual funds, even if you have lost money in the fund.
ETFs: Expense Ratios and Other Costs | Charles Schwab
"Typically, ETFs have lower expense ratios than mutual funds. Generally, low-cost equity ETFs will have a net expense ratio of no more than 0.25%. Low-cost equity mutual funds will have expense ratios of 0.5% or lower."