VTMSX vs. VSMAX

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bob1234
Posts: 76
Joined: Fri Jan 20, 2012 1:09 am

VTMSX vs. VSMAX

Post by bob1234 »

I was wondering if anyone had an opinion on Vanguard Tax-Managed Small-Cap Fund Admiral Shares (VTMSX) vs. Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) for a taxable account. The after-tax return between the two varies depending on the timeframe.

Here is my portfolio:
http://www.bogleheads.org/forum/viewtop ... =1&t=89171

Thanks in advance!
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grabiner
Advisory Board
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Joined: Tue Feb 20, 2007 10:58 pm
Location: Columbia, MD

Re: VTMSX vs. VSMAX

Post by grabiner »

bob1234 wrote:I was wondering if anyone had an opinion on Vanguard Tax-Managed Small-Cap Fund Admiral Shares (VTMSX) vs. Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) for a taxable account. The after-tax return between the two varies depending on the timeframe.
The two funds track different indexes, which is the reason for the performance difference. I prefer Tax-Managed Small-Cap because it has an inherent tax advantage (100% qualified dividends). However, if you use ETFs, VIOO is Vanguard's ETF which tracks the same S&P 600 small-cap index, and its lower costs are likely to cancel out the tax difference, particularly if the tax break on qualified dividends goes away.
Wiki David Grabiner
Topic Author
bob1234
Posts: 76
Joined: Fri Jan 20, 2012 1:09 am

Re: VTMSX vs. VSMAX

Post by bob1234 »

Thanks for the response! It was helpful.
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