SMall cap blend for taxable

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

SMall cap blend for taxable

Postby 2beachcombers » Sun Feb 10, 2013 2:40 pm

IJR on VB for SCB in taxable?

jerry
2beachcombers
 
Posts: 411
Joined: Sat Jul 31, 2010 6:10 pm
Location: Savannah

Re: SMall cap blend for taxable

Postby grabiner » Sun Feb 10, 2013 6:13 pm

The Vanguard ETF which matches IJR (S&P 600 Small-Cap) is VIOO, which has the same expense ratio; these two should be comparable. I would probably prefer VIOO for a long-term taxable holding, as there is more risk that iShares will raise the expense ratio on IJR in the future. Despite the low volume of VIOO, it normally trades at a small spread (3 cents according to Vanguard's data), because the two ETFs track the same index, allowing traders to arbitrage any difference.

VB (FTSE Small-Cap) is slightly less expensive but does not have as low a cap range, and with a higher yield, the expense difference may outweigh the cost savings.

And my own choice would be Vanguard Tax-Managed Small-Cap, which also tracks the S&P 600. Currently, this has lower expenses than the ETFs, and has 100% qualified dividends, versus about 75% for the ETFs.
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 13143
Joined: Wed Feb 21, 2007 12:58 am
Location: Columbia, MD

Re: SMall cap blend for taxable

Postby 2beachcombers » Sun Feb 10, 2013 6:38 pm

BINGO!!!!!!!!!!

100% qualified dividends--David this the most important factor for my situation.

Tax managed it is



And thanks for this and help in the past :D
2beachcombers
 
Posts: 411
Joined: Sat Jul 31, 2010 6:10 pm
Location: Savannah

Re: SMall cap blend for taxable

Postby zucckerbugger » Sun Feb 10, 2013 7:43 pm

I'm using VBR in taxable (just started adding it). Should I be using tax-managed? Very confusing subject and so many small cap funds/ETFs at vanguard?
-z
zucckerbugger
 
Posts: 23
Joined: Sun Feb 10, 2013 3:38 pm

Re: SMall cap blend for taxable

Postby grabiner » Sun Feb 10, 2013 7:59 pm

zucckerbugger wrote:I'm using VBR in taxable (just started adding it). Should I be using tax-managed? Very confusing subject and so many small cap funds/ETFs at vanguard?
-z


VBR (small-cap value) doesn't have a tax-managed alternative. If your investment strategy requires small-cap value in taxable, then VBR is probably the best choice; using Tax-Managed Small-Cap gives up the value benefit.

You can get more small-cap and value exposure by using another index, but VIOV (S&P 600 value) and VTWV (Russell 200 value) both cost 0.10% more in real expenses (after subtracting the "acquired fund fees and expenses" from Business Development Companies), and I don't believe that is worth the benefit that you need slightly less to get the same exposure.
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 13143
Joined: Wed Feb 21, 2007 12:58 am
Location: Columbia, MD

Re: SMall cap blend for taxable

Postby zucckerbugger » Sun Feb 10, 2013 8:29 pm

grabiner wrote:
zucckerbugger wrote:I'm using VBR in taxable (just started adding it). Should I be using tax-managed? Very confusing subject and so many small cap funds/ETFs at vanguard?
-z


VBR (small-cap value) doesn't have a tax-managed alternative. If your investment strategy requires small-cap value in taxable, then VBR is probably the best choice; using Tax-Managed Small-Cap gives up the value benefit.

You can get more small-cap and value exposure by using another index, but VIOV (S&P 600 value) and VTWV (Russell 200 value) both cost 0.10% more in real expenses (after subtracting the "acquired fund fees and expenses" from Business Development Companies), and I don't believe that is worth the benefit that you need slightly less to get the same exposure.



Thank you. Didn't notice that the tax-managed wasn't "value."
Ok, I'll stick with VBR.

Anybody have any recs of other small cap value options at other brokerages/companies? And why do you use them instead of vanguard? What makes them better?

Thank you.
-z
zucckerbugger
 
Posts: 23
Joined: Sun Feb 10, 2013 3:38 pm


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: abyan, Baidu [Spider], BL, Yahoo [Bot] and 44 guests