Limit orders on mutual funds
Limit orders on mutual funds
Am I wrong in remembering that, years ago, before Vanguard made me feel I was required to switch to their new "brokerage account" platform (when what I had with them was, apparently, a "mutual fund account") - I was able to buy and sell mutual funds within my IRA account with limit orders? It seems like I was able to, but I could be remembering this wrong. I DO remember being surprised that I was no longer able to, under the brokerage account.
So - do other companies (Fidelity, Schwab) allow this? I don't like putting in a request to sell or trade and then having to wait and see exactly what price I got - I liked being able to know the transaction would occur somewhere near a price I was expecting.
So - do other companies (Fidelity, Schwab) allow this? I don't like putting in a request to sell or trade and then having to wait and see exactly what price I got - I liked being able to know the transaction would occur somewhere near a price I was expecting.
Re: Limit orders on mutual funds
I do not recall in the past 10 years anything like you are suggesting with MFs at VG. But it's a pretty easy fix: call vanguard, ask for non-taxable conversion to ETF, wait 1-2 days, enter limit order.Cara wrote: ↑Mon Nov 28, 2022 2:15 pm Am I wrong in remembering that, years ago, before Vanguard made me feel I was required to switch to their new "brokerage account" platform (when what I had with them was, apparently, a "mutual fund account") - I was able to buy and sell mutual funds within my IRA account with limit orders? It seems like I was able to, but I could be remembering this wrong. I DO remember being surprised that I was no longer able to, under the brokerage account.
So - do other companies (Fidelity, Schwab) allow this? I don't like putting in a request to sell or trade and then having to wait and see exactly what price I got - I liked being able to know the transaction would occur somewhere near a price I was expecting.
Re: Limit orders on mutual funds
I've never heard of limit orders on mutual funds. I am sure that I have never been able to enter a limit order to only buy shares at or below a specified price.
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Re: Limit orders on mutual funds
+1 this, you can't limit order a dollar amount MF.
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Re: Limit orders on mutual funds
I used the mutual fund platform up until about 6 or 8 weeks ago. Never saw anything about limit orders.
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Re: Limit orders on mutual funds
In my experience no brokerages / custodians allow it, and never have.Cara wrote: ↑Mon Nov 28, 2022 2:15 pm Am I wrong in remembering that, years ago, before Vanguard made me feel I was required to switch to their new "brokerage account" platform (when what I had with them was, apparently, a "mutual fund account") - I was able to buy and sell mutual funds within my IRA account with limit orders? It seems like I was able to, but I could be remembering this wrong. I DO remember being surprised that I was no longer able to, under the brokerage account.
So - do other companies (Fidelity, Schwab) allow this? I don't like putting in a request to sell or trade and then having to wait and see exactly what price I got - I liked being able to know the transaction would occur somewhere near a price I was expecting.
The workaround is to look at the direction of the markets around 3:45 PM Eastern. Maybe the S&P 500 index or VTI (Vanguard Total Stock ETF). You can get a feel for how the market will close. Many/most stock funds are rather highly correlated with the overall stock market so that should tell you what you need.
By the way, what is the fund you want to trade? A stock or bond fund?
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Re: Limit orders on mutual funds
I've never heard of a limit order on a mutual fund. Most of Vanguard's big index funds have ETF share classes, and you can issue limit orders on ETFs.
Now that I think about it, how would a limit order on a mutual fund even be possible? You have to place your order before market close, and the mutual fund isn't priced until after market close. How could it be done? Unofficially compute the NAV early, say at 3:50, as a basis for deciding whether to execute the order or not?
Now that I think about it, how would a limit order on a mutual fund even be possible? You have to place your order before market close, and the mutual fund isn't priced until after market close. How could it be done? Unofficially compute the NAV early, say at 3:50, as a basis for deciding whether to execute the order or not?
Last edited by nisiprius on Mon Nov 28, 2022 3:22 pm, edited 1 time in total.
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Re: Limit orders on mutual funds
Prices of mutual funds are fixed and set once a day. How would a limit order even work?
Re: Limit orders on mutual funds
I can imagine how it would work for the customer: tell the company that you want to by at the NAV price for that day, after the close, as usual. Instruct that you only want the shares if the price is at or below some value you specify.
I have never heard of a company that would let you do this, so I suspect there is some reason it would be problematic for a mutual fund to take orders like that.
Even if it were possible, what would be the point?
I have never heard of a company that would let you do this, so I suspect there is some reason it would be problematic for a mutual fund to take orders like that.
Even if it were possible, what would be the point?
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Re: Limit orders on mutual funds
I would not invest in a mutual fund that supported limit orders. Market participants who trade the mutual fund would use it to their advantage, which would be to the detriment of buy-and-hold investors who invest in the fund. It would bleed cash out of the fund's cash position and into the trader's share holding, and the trading it would encourage might lead to capital gains distributions.
In any case, I think such a feature would violate frequent trading rules that fund companies maintain to comply with regulatory mandates.
In any case, I think such a feature would violate frequent trading rules that fund companies maintain to comply with regulatory mandates.
Re: Limit orders on mutual funds
I worked in mutual fund operations. I can’t figure out how this would technically work.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: Limit orders on mutual funds
Specify a price, and if the mutual fund closes below the price for a buy or above the price for a sell, complete the transaction. The problem is that other fund investors are not willing participants-- they collectively hold the other side of the trade, in effect. With an ETF, the limit order is to buy or sell from someone or some entity who already has or is wanting to buy the shares. They are voluntarily choosing to take the other side of the trade at the specified price.
Re: Limit orders on mutual funds
On a more specific point, by law and regulation you need all of the orders in and the books closed before you strike the NAV. New orders would change the net assets (but not the NAV) of the fund and thus would require you to reopen the books again. You don’t do this. Major overhaul of regulations and operations would be required.Northern Flicker wrote: ↑Mon Nov 28, 2022 5:00 pmSpecify a price, and if the mutual fund closes below the price for a buy or above the price for a sell, complete the transaction. The problem is that other fund investors are not willing participants-- they collectively hold the other side of the trade, in effect. With an ETF, the limit order is to buy or sell from someone or sone entity who already has or is wanting to buy the shares. They are voluntarily choosing to take the other side of the trade at the specified price.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Limit orders on mutual funds
This sounds like the mutual fund scandal of 2003. Some brokers and big favored investors colluded to allow "late trades" after the 4:00 PM closing. They allowed after hours trades to be pre-dated to before 4:00 PM. Prosecutor Eliot Spitzer said this was like being allowed to place bets after the horses crossed the finishing line. Billions in fines were paid by the some of the biggest brokers, investment banks and mutual fund managers.
Re: Limit orders on mutual funds
You cannot place a limit, stop, or stop-limit order for a mutual fund. Mutual fund orders must be received prior to the last window for a window trade, or the market close for a market order, on days that the market is open.Cara wrote: ↑Mon Nov 28, 2022 2:15 pm Am I wrong in remembering that, years ago, before Vanguard made me feel I was required to switch to their new "brokerage account" platform (when what I had with them was, apparently, a "mutual fund account") - I was able to buy and sell mutual funds within my IRA account with limit orders? It seems like I was able to, but I could be remembering this wrong. I DO remember being surprised that I was no longer able to, under the brokerage account.
So - do other companies (Fidelity, Schwab) allow this? I don't like putting in a request to sell or trade and then having to wait and see exactly what price I got - I liked being able to know the transaction would occur somewhere near a price I was expecting.
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