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Whenever I want to buy or sell mutual funds, it ends up being a multiple day process for me. For example buying mutual funds:

  1. Visit my brokerage account and have them transfer the funds in from my bank
  2. Wait two days for the funds to arrive
  3. Visit my brokerage account have them purchase a mutual fund
  4. Check the next day that it was sucessful

Similarly, when I need to rebalance:

  1. Visit my brokerage account and sell the mutual funds that have excess
  2. Wait a day
  3. Visit my brokerage account and buy the other funds
  4. Check the next day that it was sucessful

It seems like I should be able to issue the all the instructions at once and have my brokerage do it:

  1. Visit my brokerage account and have them transfer the funds in from my bank and instruct them what to buy with that money.
  2. Check in several days that the transactions were executed sucessfully.

Or for rebalancing:

  1. Instruct my brokerage account to sell one mutual fund and use the proceeds to buy others.
  2. Check in several days that the transactions were executed sucessfully.

Do brokerage funds typically have this type of functionality and I'm just not finding it? Is there a different way to simplify these kinds of transactions?

  • If the mutual funds that you are buying are in the same family as the mutual funds that you are selling, then there is a way of shortening the process that involves dealing with the mutual fund family directly (e.g. Vanguard) instead of through your on-line brokerage (e.g. eTrade). – Dilip Sarwate May 19 '15 at 17:04
  • That is interesting. Can you create an answer that explains more about it and how to do it? (And I assume it only helps in the re-balancing case.) – Stephen Ostermiller May 19 '15 at 17:06
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If you are buying and selling mutual funds in the same family of funds (e.g. Vanguard), then you can set up an on-line account on the Vanguard website (www.vanguard.com) and it is easy: Vanguard offers a "Transaction" service that allows you to sell shares of VFINX, say, and buy shares of VBTLX, say, from the proceeds of the sale all in one swell foop. But, if you are holding the VFINX shares through your on-line account with, say, eTrade, then it depends on what services eTrade provides to you. Will it allow doing all that in one transaction, or will it wait for the cash to come from Vanguard, and then send the money back to Vanguard to invest in VBTLX?

In any case, selling VFINX shares and investing the proceeds in PRWCX shares, say, cannot be done on the Vanguard site only; Vanguard will send the proceeds of the sale of the VFINX shares only to your bank account, not anywhere else. You then need to tell T. Rowe Price (where you presumably have an account already) that you want to invest $X in PRWCX shares and to withdraw the cash from your bank account. If you are doing it all through eTrade, then the money from the sale of VFINX goes from Vanguard to eTrade (into something called a sweep account, or maybe your cash account at eTrade) and you invest it in PRWCX after appropriate delays in receiving the money from Vanguard into eTrade, etc. If your cash account (bank or eTrade) has enough of a balance, you could sell VFINX and buy PRWCX on the same day. where the purchase is made from the money in the cash account and replaced a few days later by the proceeds from Vanguard. Bouncing of checks (or inability to act on a hot tip to invest in something) in the interim is your problem; not the bank's or eTrade's.

  • Ditto for Columbia funds; probably ditto for most others. I consider not having to go thru (and pay) a broker one of the many advantages of working with funds rather than individual stocks, and it does offer a possible advantage to keeping all your funds in the same "family" so you can move value directly between them. – keshlam May 19 '15 at 17:36
  • What is a foop and why is it swell? – Eric May 19 '15 at 23:25
  • Should be "fell swoop" I believe. – Stephen Ostermiller May 19 '15 at 23:26
  • 2
    @Eric and StephenOstermiller It is from Shakespeare's MacBeth in which MacDuff, an exiled Scottish noble exclaims about his family who has been put to death on MacBeth's orders: "What, all my pretty chickens and their dam / At one fell swoop?" Alas, I attended one production of the Scottish play in which the actor stumbled on his lines and said it as "... One swell foop?" It is too good a Spoonerism to forget... – Dilip Sarwate May 19 '15 at 23:41

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