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Are iShares or Vanguard ETF's Better Investments?

iShares ETF vs Vanguard ETF

While both ETF management companies are popular and trustworthy they don’t have the same fees, nor the same investment options. Generally the ETFs by Ishares are slightly better in the ultra long-term due to their slightly lower expense ratios.

In truth though the expense ratios are so dang close to one another that neither are something you should fret over if you already own one over the other. If you own neither of the brands of ETFs I’d recommend considering duplicating the ETFs yourself in an M1 Finance account so you can cut out the expense ratio entirely.

Which has lower fees - Vanguard or iShares ETF's?

Ultimately both Vanguard and iShares ETF’s have similar fees in the form of expense ratios — generally they’re within 0.01% to 0.03% of one another for their like-kind ETF’s (for example for VOO and IVV, Vanguard and iShares S&P 500 etfs, they both only charge 0.03% in fees in the form of an expense ratio.

Truthfully what matters more than fees in an ETF is their fees and what unique elements they have to them. We’d also say it’s important to consider the risk of ETF bankruptcy and consider your current tax strategy — generally it’s best to have diversified your ETF holdings between companies because of such risks (and tax benefits).

Other than expense ratios, which is better?

Honestly it entirely depends on which has a greater discount or premium currently, as their ETF’s are nearly identical and it’s actually a toss-up on which would be better in the long-run other than expense ratios, which play little role due to how close they are to each other.

The only real difference is iShares ETF’s seem to favor companies that are more international-oriented, while Vanguard ETF’s are slightly more domestically (US) oriented. The difference is minimal, and only present in bonds & global indexes from what I have looked over.

The two deciding factors between these two ETF “brands” would be if you’re a non-US tax resident or if you’re a US citizen with tax residency in the United States. The reason being, some Vanguard ETF’s have disadvantageous dividend taxation for non-US tax residents (such as a European Citizen), while iShares has a friendlier tax structure, but again it saves minimal, even in the long-run.

Do you use iShares or Vanguard?

I use neither, as I have a brokerage account with M1 Finance for both my taxed account and my IRA/Roth-IRA, and they have the ability for you to create a portfolio that auto-rebalances, and you can simply mirror the portfolios that Vanguard or iShares makes up and plug them into M1 Finance and get yourself a fee-free ETF with no expense ratio.

They also have no trading fees/commissions, so you save on that too if you’re not with a commission-free broker yet.

Alright, that’s not entirely true, I do use one of them more than the other, and that’s iShares. I can’t think of a time I’ve actually used Vanguard ETFs, as they’re always easily duplicatable in M1 Finance. However, I cannot duplicate OTC traded shares, so for certain foreign markets such as Thailand I have to use the real ETF, and the ETFs I use in that case seems to always be iShares. This is because Vanguard rarely has an ETF for it, and when they do it’s usually a basis point or two higher than iShares ETFs.

If you want to just replicate their ETF’s and cut out the expense fees you can sign up for M1 Finance by clicking here.

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