Help: Vanguard Total International Stock Market vs. Schwab International Index
Help: Vanguard Total International Stock Market vs. Schwab International Index
Hi....I've been on the boards for a while now and have learned much and am becoming more self sufficient, but wanted to ask for help on one issue.
I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
My goal is to approximate the VG Target Date 2035, in which VGTSX is a component. Schwab has SWISX, but I learned that The it is based on the MSCI EAFE index, which does not include emerging market stocks, Canadian stocks, and which has minimal exposure to international small cap stocks.
What products do folks who own SWISX use to better approximate VGTSX (perferably from schwab or from the one source)?
Thanks
I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
My goal is to approximate the VG Target Date 2035, in which VGTSX is a component. Schwab has SWISX, but I learned that The it is based on the MSCI EAFE index, which does not include emerging market stocks, Canadian stocks, and which has minimal exposure to international small cap stocks.
What products do folks who own SWISX use to better approximate VGTSX (perferably from schwab or from the one source)?
Thanks
Last edited by bennettg on Sat May 06, 2017 6:35 am, edited 1 time in total.
Re: VGTSX vs SWISX
Unfortunately, Schwab doesn't have a market-weighted emerging markets index fund. Your best bet if you really want to avoid ETFs is SFENX (Schwab Fundamental Emerging Markets Large Company Index Fund), although its expense ratio at 0.39% is a bit higher (but maybe you prefer the factor loadings of the fundamental index). Similarly, you could add SFILX (Fundamental International Small Cap) if you want that exposure. I personally suck it up and stick with ETFs SCHF, SCHE and SCHC at Schwab for my international exposure. I do prefer the simplicity of index mutual funds, but it isn't a huge deal to me to make the ETF orders.
Re: VGTSX vs SWISX
OP, you might get more responses if you edit your thread title to include the fund names for the tickers.
Gordon
- backpacker
- Posts: 1620
- Joined: Mon Sep 22, 2014 2:17 pm
Re: VGTSX vs SWISX
Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
Re: VGTSX vs SWISX
Updated, thanks.gkaplan wrote:OP, you might get more responses if you edit your thread title to include the fund names for the tickers.
Re: VGTSX vs SWISX
Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
- backpacker
- Posts: 1620
- Joined: Mon Sep 22, 2014 2:17 pm
Re: VGTSX vs SWISX
Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
- in_reality
- Posts: 4529
- Joined: Fri Jul 12, 2013 6:13 am
Re: VGTSX vs SWISX
ETFs are really the way to go at Schwab.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
If you believe in value tilting or are willing to do so for that part of your international holdings, Schwab does have some good international mutual funds (SFENX - Emerging 0.39% ER, SFILX International Small 0.39% ER).
I'm not here to argue whether or not the value premium can overcome their slightly higher cost. These funds are probably your best options to get small developed international and emerging market exposure via mutual funds available at Schwab. Other one source funds have a higher ER.
If you look at SFENX, it's returned about the same ($90 more on a $10k investment) as VEMAX over it's life (about 9 years). SFILX has done better ($5k more on a $10k investment over about 8 years) than VSS (Vanguard International Small). SFENX dropped a lot in 2015 and I think you have to be prepared for periods of underperformance with these (and all value) funds.
Small value is a kind of popular tilt on the forum and FNDC which is the ETF version of SFILX which is a popular choice for small international value (partly due to a lack of other options).
SFENX and SFILX are also the mutual fund versions of the ETFs that Schwab uses in it's intelligent portfolios.
SFENX's largest holding is S.Korea 18.52% and SFILX's third largest holding is Canada 8.18% so you'd get some of your missing exposure. I thought they followed a FTSE index which includes S.Korea as developed but anyway there it is in emerging.
I use the ETFs versions for my international holdings.
Otherwise, the new Schwab Target Index funds have a rock bottom ER and might be an option too. They are a mutual fund that holds ETFs - no small international though and they phase out emerging at retirement (to reduce volatility I imagine). Not the Target Date fund - the Target Index funds with the 0.08% ER [it was 0.13% but someone said it got all reduced to the institutional price].
Re: Help: Vanguard Total International Stock Market vs. Schwab International Index
Here's a minority viewpoint on this board. I think Schwab is right. The default international option should be developed markets with emerging an add-on for those that want it. Emerging has potentially more reward, but carries significant risk.
Re: VGTSX vs SWISX
Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
- in_reality
- Posts: 4529
- Joined: Fri Jul 12, 2013 6:13 am
Re: VGTSX vs SWISX
To see what market cap weighting of the Schwab ETFs would be, there is a simple calculator here. (it pulls data from Morningstar so sometimes has trouble loading when M* is refreshing pages). I don't see a reason to use Vanguard ETFs at Schwab.bennettg wrote:Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Target Index Funds are here: https://www.schwabfunds.com/secure/file/P-9430864
- backpacker
- Posts: 1620
- Joined: Mon Sep 22, 2014 2:17 pm
Re: VGTSX vs SWISX
That makes sense. The way I'm thinking about it, you have a couple really good options.bennettg wrote:Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.bennettg wrote: I've been intrigued with Schwab's new lower cost index funds.....had reluctantly been using ETFs to save a bit. But with the new lower ERs, I'd like to go back to index funds.
Option 1: Just use Schwab index funds. You can use their total domestic fund (SWTSX) and their international fund (SWISX). Sure, the international fund lacks emerging markets and small cap international stocks but, in practice, it behaves almost exactly the same as Vanguard's international fund that includes them. You can see the similarity in the chart below. I don't think the difference is worth worrying much about.
Option 2: Have your contributions auto deposited into Schwab's total bond fund SWAGX every two weeks. Then, at least once a year, use the money in the fund to buy the 2035 Schwab target date fund (SWXFX). The purchase should be commission free. This keeps your total number of funds to a minimum. Your bond allocation will creep up over the course of the year, but that's no big deal. You can always send money from your bond fund to the target date fund more frequently if you want.
Re: VGTSX vs SWISX
Thank you. This is very helpful. Can I ask another question.....?in_reality wrote:To see what market cap weighting of the Schwab ETFs would be, there is a simple calculator here. (it pulls data from Morningstar so sometimes has trouble loading when M* is refreshing pages). I don't see a reason to use Vanguard ETFs at Schwab.bennettg wrote:Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.backpacker wrote:
Is there are reason you want to use Schwab instead of Vanguard? Vanguard sends all of its security lending revenue back to investors, unlike its for profit competitors, so the ER is often in reality lower than the stated ER.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Target Index Funds are here: https://www.schwabfunds.com/secure/file/P-9430864
If I were to buy a Schwab Target Index fund (as mentioned in some other posts), is there a resource that would allow me to compare the expense ratio of the target index fund with what I would pay by buying the underlying funds/etfs in the same proportions? I understand that it may be more tax efficient to own the underlying funds, but also wonder if it is cheaper? Does schwab charge for the 'simplicity' of the target index fund ?
- in_reality
- Posts: 4529
- Joined: Fri Jul 12, 2013 6:13 am
Re: VGTSX vs SWISX
A rough estimate is that it costs about 0.035% more. The Target Index funds are 0.08% and a three fund ETF portfolio is about 0.045 (depending on you allocation).bennettg wrote:Thank you. This is very helpful. Can I ask another question.....?in_reality wrote:To see what market cap weighting of the Schwab ETFs would be, there is a simple calculator here. (it pulls data from Morningstar so sometimes has trouble loading when M* is refreshing pages). I don't see a reason to use Vanguard ETFs at Schwab.bennettg wrote:Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.bennettg wrote:
Schwab is what I am offered via my employer's plan. I suppose I could buy vanguard on the schwab platform, but the fees are $76 which isn't worth it to me. And I am not comfortable with ETFs. I just want to keep it as simple as possible.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Target Index Funds are here: https://www.schwabfunds.com/secure/file/P-9430864
If I were to buy a Schwab Target Index fund (as mentioned in some other posts), is there a resource that would allow me to compare the expense ratio of the target index fund with what I would pay by buying the underlying funds/etfs in the same proportions? I understand that it may be more tax efficient to own the underlying funds, but also wonder if it is cheaper? Does schwab charge for the 'simplicity' of the target index fund ?
They also have some allocation to cash which functions as a zero duration bond in their way of thinking and is part of fixed income overall, but others say it's an opportunity for Schwab to loan out that money through their bank and only pay you part of what they get (based on average rates that are published someplace).
I think it's worth it because if you are like most, you'll probably want to tweak your allocation, and might not keep in balance.
The funds were originally 0.13% but everything was moved to the institutional price of 0.08%. Not sure why but it's really cheap.
You can do an exact comparison if you want...
You've got a number of great options here including VXUS. You are lucky to have such a good plan.
Re: VGTSX vs SWISX
Thank you once again. What tool did you use to get your rough estimate? I'm hoping to learn so I can do for myself.in_reality wrote:A rough estimate is that it costs about 0.035% more. The Target Index funds are 0.08% and a three fund ETF portfolio is about 0.045 (depending on you allocation).bennettg wrote:Thank you. This is very helpful. Can I ask another question.....?in_reality wrote:To see what market cap weighting of the Schwab ETFs would be, there is a simple calculator here. (it pulls data from Morningstar so sometimes has trouble loading when M* is refreshing pages). I don't see a reason to use Vanguard ETFs at Schwab.bennettg wrote:Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?backpacker wrote:
Ah, I see. Maybe say a bit more about why you don't like ETFs? Vanguard's ETF shares and funds shares are just different share classes of the very same funds. You have the same thing either way. For my own part, I would definitely put up with using ETFs to get Vanguard's better coverage of international markets and substantially lower fees.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Target Index Funds are here: https://www.schwabfunds.com/secure/file/P-9430864
If I were to buy a Schwab Target Index fund (as mentioned in some other posts), is there a resource that would allow me to compare the expense ratio of the target index fund with what I would pay by buying the underlying funds/etfs in the same proportions? I understand that it may be more tax efficient to own the underlying funds, but also wonder if it is cheaper? Does schwab charge for the 'simplicity' of the target index fund ?
They also have some allocation to cash which functions as a zero duration bond in their way of thinking and is part of fixed income overall, but others say it's an opportunity for Schwab to loan out that money through their bank and only pay you part of what they get (based on average rates that are published someplace).
I think it's worth it because if you are like most, you'll probably want to tweak your allocation, and might not keep in balance.
The funds were originally 0.13% but everything was moved to the institutional price of 0.08%. Not sure why but it's really cheap.
You can do an exact comparison if you want...
You've got a number of great options here including VXUS. You are lucky to have such a good plan.
- in_reality
- Posts: 4529
- Joined: Fri Jul 12, 2013 6:13 am
Re: VGTSX vs SWISX
Eyeball. The googleheets link above gives a market cap weighted three fund portfolio and its expense. The ERs are easy to lookup either on Morningstar or Schwab's ETF page.bennettg wrote:Thank you once again. What tool did you use to get your rough estimate? I'm hoping to learn so I can do for myself.in_reality wrote:A rough estimate is that it costs about 0.035% more. The Target Index funds are 0.08% and a three fund ETF portfolio is about 0.045 (depending on you allocation).bennettg wrote:Thank you. This is very helpful. Can I ask another question.....?in_reality wrote:To see what market cap weighting of the Schwab ETFs would be, there is a simple calculator here. (it pulls data from Morningstar so sometimes has trouble loading when M* is refreshing pages). I don't see a reason to use Vanguard ETFs at Schwab.bennettg wrote:
Thank you for your response. It costs $4.95 to buy a Vanguard ETF at Schwab. I am paid every two weeks and have monies taken out and sent to my retirement plan. If you buy schwab funds, there is no charge, so you can buy what you want every two weeks. But if I were to buy Vanguard ETFs at schwab, at what frequency does it become cost-prohibitive? In other words, if my goal was to have a 3 fund VG portoflio, how frequently should I buy each ETF?
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Target Index Funds are here: https://www.schwabfunds.com/secure/file/P-9430864
If I were to buy a Schwab Target Index fund (as mentioned in some other posts), is there a resource that would allow me to compare the expense ratio of the target index fund with what I would pay by buying the underlying funds/etfs in the same proportions? I understand that it may be more tax efficient to own the underlying funds, but also wonder if it is cheaper? Does schwab charge for the 'simplicity' of the target index fund ?
They also have some allocation to cash which functions as a zero duration bond in their way of thinking and is part of fixed income overall, but others say it's an opportunity for Schwab to loan out that money through their bank and only pay you part of what they get (based on average rates that are published someplace).
I think it's worth it because if you are like most, you'll probably want to tweak your allocation, and might not keep in balance.
The funds were originally 0.13% but everything was moved to the institutional price of 0.08%. Not sure why but it's really cheap.
You can do an exact comparison if you want...
You've got a number of great options here including VXUS. You are lucky to have such a good plan.