Vanguard creates new ETF shares regularly. Normally, it occurs when authorized participants for the fund supply a creation basket. With the MF->ETF conversion, new ETF shares are created from the customer's existing mutual fund shares.
A couple of points worth mentioning.
1. You cannot convert back to MF shares. To do that, you would have to sell the ETF, and use the proceeds of the sale to buy the MF shares. That could be a taxable event if the shares are held in a taxable brokerage account.
2. I think it is a good idea to take a screen shot of the tax lots being converted, and use it to verify that the new cost basis was calculated and stored accurately. If my memory is accurate, it will average the cost basis over the tax lots for each share type (covered, non-covered).
A couple of points worth mentioning.
1. You cannot convert back to MF shares. To do that, you would have to sell the ETF, and use the proceeds of the sale to buy the MF shares. That could be a taxable event if the shares are held in a taxable brokerage account.
2. I think it is a good idea to take a screen shot of the tax lots being converted, and use it to verify that the new cost basis was calculated and stored accurately. If my memory is accurate, it will average the cost basis over the tax lots for each share type (covered, non-covered).
Statistics: Posted by Northern Flicker — Wed Oct 16, 2024 11:36 pm — Replies 26 — Views 4193