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Old 07-04-2014, 11:21 AM
Location: Paranoid State
13,044 posts, read 12,143,269 times
Reputation: 15785


For some reason, I'm having a mental block thinking through the logic & issues about switching from a higher cost fund to a low cost one in the same family in a taxable account.

20+ years ago, we invested through an independent financial advisor. He put our cash into several index funds offered through SEI (SEI - Home - US) which seems to offer their funds through financial advisors.

Here's an example. We're invested in SSPIX, a Fortune 500 index fund offered by SEI (http://www.seic.com/docs/IMU/SEI_SIMT_SP500Anet.pdf), and over the years we've reinvested dividends, so there are numerous "lots" each with a different cost basis. And, because this spans 20 years in this fund, I have substantial paper gains.

The SSPIX currently says its expense ratio is .54% before fee waivers, and .43% after fee waivers (which may be discontinued any time).

A Fortune 500 fund from Vanguard (VOO), of course, has an expense ratio of .05%.

So... here I am years later, and I don't need the funds any time soon.

Should I:

a) sell the SEI fund SSPIX, incur the tax obligation, and reinvest the proceeds back into VOO so it can grow with the lower expense ratio?

b) let it ride because I don't need the money right now?

c) a combination based on lot date (short term vs. long term cap gains on reinvested dividends)?

d) something else?
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