Bogleheads

[johnanglemen]

I was surprised to find that Fidelity Spartan Advantage shares beat the ERs of similar Vanguard ETFs -- and they're contractual rates, not teaser crap. For instance:

Vanguard Total Stock Market ETF (VTI) -- 0.09%
Fidelity Spartan Total Market Index (FSTVX) -- 0.07%

Vanguard FTSE All-World ex-US ETF (VEU) -- 0.25%
Fidelity Spartan International Index Advantage (FSIVX) -- 0.07% teaser, 0.17% contractual

What do you guys make of this? I'm thinking of switching to Fidelity Spartan for these two classes once I qualify for the Advantage shares.

[DSInvestor]

John, I would add Fidelity Spartan Total Stock Market investor FSTMX er=0.10% to the comparison with VTI.

For US stocks, I'd go with either FSTMX or FSTVX over VTI. The Fidelity funds (Investor or Advantage) are within 2 basis points of VTI's expense ratio and as regular mutual funds, they're easy to use. You should be able to setup automatic purchases into the Fidelity funds at WellsFargo. You'd have no worries about bid/ask spread or premium/discount to NAV. However if you can access Vanguard's Total Stock Market Admiral VTSAX at Wells Fargo, that's the best choice.

For INTL stocks, I'd go with VFWIX or VEU over the Fidelity Spartan International. VEU includes 22% Emerging Markets. The Fidelity fund does not include Emerging Markets. If you'd like to automate your purchases, VFWIX would be a fine choice. The er is slightly higher than VEU but you don't have to worry about the bid/ask spread or premium/discount to NAV.

edit:BTW, if you start with VTI and wish to "switch" to the Fidelity fund, you'd need to sell VTI which would be a capital gain event. If you sell for a gain, you owe capital gains tax. If you sell for a loss, you may have a wash sale as VTI may be "substantially identical" to Fidelity Spartan Total Stock Market. I'd decide now which to use and stick with it (until you have an opportunity to harvest tax losses).

[johnanglemen]

Thanks DSInvestor. Why do you say that Vanguard Total Market (VTSAX) is the best choice if accessible given that its ER is higher than Fidelity Total Market (FSTVX)?

[livesoft]

i use Fidelity Spartan funds in my 401(k). I use Vanguard ETFs in my taxable account. I use Vanguard bond funds in our IRAs.

Fidelity Spartan funds have trading restrictions. In a taxable account, it is easier to find a similar, but not substantially identical fund with a Vanguard ETF. Sure, you could do some exchanges from FUSEX to FSTMX, but what choices do you have for FSEMX? And if you don't want Treasuries, what Fidelity Spartan fund would you use for your fixed income?

I do not believe the Vanguard Total Stock Market Index fund admiral share class is available at WF. Their actively-managed funds are available in admiral class, but not their index funds (I think).

Anyways, despite the mantra of low fees on this forum, a difference of 0.02% is not significant. Other things will be more significant than that. Just the day you buy/sell will have more effect.

[johnanglemen]

Also, you (DSInvestor) mentioned that VFWIX's ER (0.40%) is "slightly" higher than VEU (0.25%). I don't want to get bogged down if this is really a minor difference, but then what to make of Vanguard's ETF/mutual fund comparison calculator (https://personal.vanguard.com/us/faces/JSP/Funds/Tools/FundsToolsEtfCostPurchInfoContent.jsp)?

According to the calculator, if I invest an initial $3000 into VEU and VFWIX and then an additional $1000 a month, with an annual return of 7% over 30 years, the calculator claims I save $16,000 in costs by choosing VEU.

[DSInvestor]

[johnanglemen]

DSInvestor,

I always appreciate your perspective on this stuff. I'm also a big fan of simplicity, but if I could be reasonably confident about saving 16k in ER costs over the long run without driving myself absolutely nuts on each trade, I start to wonder.

Regarding the NAV premium, isn't it true that if I often buy at a premium, I might also sell at a premium, thus negating that factor? Or is the idea that the premium exists now while the fund is young but will dissipate over time as volume increases, thus forcing me to buy at a premium and sell at par?

It also seems like the bid/ask spread, while very real, is outweighed by the fact that the ER is an annual cost while the spread is a one-time purchase cost. (And the Vanguard calculator does take bid/ask spread into account.)

Lastly, I've heard that for international ETFs like VEU, the NAV premium/discount stats can be misleading because the international markets trade at different times from the US-based ETFs that track them, so the closing NAV and the closing share price happen at different times. Not sure if there's any truth to this.

[natureexplorer]

Interesting discussion. I am also a big fan of simplicity and as such I would not buy more of VWO (or its equivalent mutual fund) to get an Emerging Market tilt. Rather I'd simply, purchase FTSE ex-US as an ETF or mutual fund. What I am wondering though is why they don't have admiral shares for the FTSE ex-US mutual fund. Can anyone shed some light on this? I much favor the automatic purchase feature in Vanguard over having to put in orders for ETF purchases, but right now the difference in ER of VEU versus the mutual fund does add up.

With the Vanguard Admiral shares for Total US Stock Market, I don't really see the need to buy VTI anymore - although I believe there might be some tax advantage by owning the ETF rather than the mutual fund. How big that effect is, I don't quite understand though. I believe it is pretty small. Can anyone shed some light on this?

[natureexplorer]

[Doc]

[Tramper Al]

On the taxable side, I try to be very very careful about chasing lower ER funds. Those I expect to stay with the program for another 30-40 years, those are the ones to which I want to commit long term. Right, but how can I really know. I always do the math, but I think it would take a very hefty increase in ER before I would think it justified to abandon a taxable position with substantial unrealized gains.

In the past, I have owned mutual funds that merged into other (similar) funds. Sure the course changed, but at least I had the choice of holding onto those as yet untaxed gains. Last year an ETF I owned closed up shop and simply sent me a check for the NAV. That wouldn't be a great outcome with gains of 100%, 200%, etc. in a taxable location and no plans to sell.

[Rodc]

Honda vs Toyota.

You do want to compare apples to apples, so for example if comparing one international fund A with another international fund B, you can't have A with emerging markets and B without.

No one tracks their index perfectly. Life is not static, fees will change over time even contractual ones as the contract life is not infinite and some other better option may come along. Microscopic differences like 0.02% are completely lost in the tracking error noise.

Use which ever is easiest for you and spend your energy worrying about something that really matters, would be my advice.

Best of luck.
_________________
"all standard caveats apply"

[DSInvestor]

[johnanglemen]

DSInvestor -- Sorry, by "switch to" I simply meant I could start accumulating a different fund with new money. I wouldn't sell off my existing holdings and realize a gain. As far as I know, there's no downside to this except complicating my portfolio and taking longer to get to the $100k min for Vanguard Admiral / Spartan Advantage shares.

[johnanglemen]

Also, with regards to my time, I look at it like this: If I have to sit down and spend time on *any* trades each month, I might as well do all trades. So I'd only switch entirely to automatic funds if I were willing to do that across my four monthly investments: VTI, VSS, VEU, VBR. The difference in ER gets higher when you factor in all four of these. The mutual fund version of VSS also has purchase and redemption fees.

[natureexplorer]

[DSInvestor]

[grabiner]