Based on my previous post on whether to convert my VEIEX (Vanguard Emerging Market Index Fund) holding to VWO (ETF class), I thought it would be a good exercise for me to try to build a simple calculator to compute the breakeven investment amount for investors who need to pay the $50 conversion fee.
The calculator below will find the breakeven point which will make it worthwhile to perform the mutual fund to ETF conversion. The calculator inputs are as follows.
- The conversion fee, currently $50. Enter 50.
- The ETF expense ratio saving. For example, VEIEX ER=0.37% and VWO ER=0.25%. The difference is 0.12%, enter as 12.
- The investment horizon in years.
- The expected annual return. If the expected annual return is 8%, enter 8.
When the investment amount to be converted is higher than that calculated, a conversion would be worthwhile (assuming the assumptions are true). Note that as mentioned in the previous post, taxes are not considered in the computations.
ETF Conversion Decision Calculator