Opinions on SPTM ETF in taxable for US stock index fund

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ChinchillaWhiplash
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Opinions on SPTM ETF in taxable for US stock index fund

Post by ChinchillaWhiplash » Wed Feb 28, 2018 9:08 am

SPTM. SPDR® Portfolio Total Stock Market ETF ER = 0.03. Commission free.
TDA offers this ETF with no fee. Mimics Index. Holds 2300 companies. Would this be OK as an alternative to other total US market funds since there are no others that are available without commision? Plan on staring a position in taxable account at some point. Probably just adding a little each month, like 3-4 shares.

deltaneutral83
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by deltaneutral83 » Wed Feb 28, 2018 9:13 am

I use it, it's fine as it tracks very closely to VG TSM. The one issue the will drive the purists crazy is the bid/ask is usually 3-4 cents which represents a higher % of the underlying ETF when you think about VTI always having a one cent bid/ask and it costing 4x SPTM. Hopefully it will become more liquid in the future. I moved my taxable account to ME because of TDA "updating" their commission free list, just keeping my HSA and Roth at TDA.

livesoft
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by livesoft » Wed Feb 28, 2018 9:21 am

I own it. It is a serviceable substitute for VTI although the bid/ask spread of SPTM is larger. I would almost never have a problem submitting a market order for VTI, but I will always consider a limit order when using SPTM.

On average something like $400 million of VTI changes hands every day. For SPTM the number is less than $18 million.
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ChinchillaWhiplash
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by ChinchillaWhiplash » Wed Feb 28, 2018 11:19 am

Thanks for the replies. I was worried about the lack of liquidity with this fund. Must not be many indexers on TDA :oops: maybe that will change in the near future. Wish they didn't drop Vanguard funds from the commission free list :annoyed

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by livesoft » Wed Feb 28, 2018 1:28 pm

I don't want to own any ETF where my holdings are more than 5% of the daily volume. There are plenty of Bogleheads with more than a million dollars in Total US Stock Market and that would be more than 5% of the daily volume of SPTM.
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aristotelian
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by aristotelian » Wed Feb 28, 2018 1:35 pm

I use it in my HSA which goes through the TDA brokerage platform. Right now the bid/ask is all of 2 cents. I wouldn't worry about it.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by triceratop » Wed Feb 28, 2018 2:19 pm

aristotelian wrote:
Wed Feb 28, 2018 1:35 pm
I use it in my HSA which goes through the TDA brokerage platform. Right now the bid/ask is all of 2 cents. I wouldn't worry about it.
That is 6bp.

VTI regularly trades at 1bp spreads (or is crossed, with a 0bp spread), which is less than 1bp at its share price. I'm not saying SPTM is inappropriate, but we should be accurate about the size of the spread: 6bp is significant on a total US market index ETF.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Is SPTM ETF any good?

Post by ChinchillaWhiplash » Sun Apr 22, 2018 2:37 pm

[Thread merged into here, see below. --admin LadyGeek]

SPTF Spider Total US Stock Index ETF ER = .03. Mimics the index. I want to use this in my taxable (TDAmeritrade) since it is commission free. It has pretty low volume. Spread is bigger than average because of this. Is this a decent fund to park money in? Is there a better fund available with no commissions with TDA?

motorcyclesarecool
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Re: Is SPTM ETF any good?

Post by motorcyclesarecool » Sun Apr 22, 2018 2:50 pm

I see no good alternative. Did you get any commission-free trades for opening your account? That might be a good way to get into VTI...
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Is SPTM ETF any good?

Post by ChinchillaWhiplash » Sun Apr 22, 2018 2:54 pm

Unfortunately it was an old account. Commissions are low, so was thinking of TLH into VTI or similar once a year.

motorcyclesarecool
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Re: Is SPTM ETF any good?

Post by motorcyclesarecool » Sun Apr 22, 2018 2:57 pm

The low share price amplifies the effect of that bid-ask spread, too, but at least it could mean a smaller leftover cash [balance].
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

motorcyclesarecool
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Re: Is SPTM ETF any good?

Post by motorcyclesarecool » Sun Apr 22, 2018 3:01 pm

Threads merged; comment deleted.
Last edited by motorcyclesarecool on Sun Apr 22, 2018 3:37 pm, edited 1 time in total.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Is SPTM ETF any good?

Post by indexfundfan » Sun Apr 22, 2018 3:02 pm

You could open a taxable account at Vanguard and invest in VTI.
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deltaneutral83
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Re: Is SPTM ETF any good?

Post by deltaneutral83 » Sun Apr 22, 2018 3:03 pm

I think most people use SPTM if they use TDA since they "updated" their commission free list. I use it in my HSA no problem.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by LadyGeek » Sun Apr 22, 2018 3:32 pm

ChinchillaWhiplash - It's best to keep all the information in one spot. I merged your question back into the original thread.
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motorcyclesarecool
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by motorcyclesarecool » Sun Apr 22, 2018 3:34 pm

For a big transaction a single commission of $6.95 to buy VTI is cheaper than paying 6 bp of bid-ask spread for SPTM.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

SlowMovingInvestor
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by SlowMovingInvestor » Sun Apr 22, 2018 4:07 pm

I would rather hold ITOT or VTI or one the Schwab ETFs, but at TDAM, it's the only one available commission free. So I do hold it at TDAM, but nowhere else.


EDITED: And yes, the poor commission free choices at TDAM are why I'm considering moving my accounts once some holding periods expire. Fidelity, Etrade, Schwab, and Vanguard have much bettter commission free choices, and ME has 90 free trades a month for only 100K in holdings.
Last edited by SlowMovingInvestor on Sun Apr 22, 2018 4:29 pm, edited 1 time in total.

airelleofmusic
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by airelleofmusic » Sun Apr 22, 2018 4:12 pm

I use similar ETFs from SPDR: SPEM for EM, SPDW,for developed ex-us and SPLG for SPX through TDA too. I am very satisfied and don't trade very often (2/3 times a year) so bid/ask spread is not very important for me.
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by TIAX » Sun Apr 22, 2018 4:50 pm

motorcyclesarecool wrote:
Sun Apr 22, 2018 3:34 pm
For a big transaction a single commission of $6.95 to buy VTI is cheaper than paying 6 bp of bid-ask spread for SPTM.
What do you think is the break-even point for a big enough single transaction to make paying the commission for VTI make sense?

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by drk » Sun Apr 22, 2018 5:00 pm

TIAX wrote:
Sun Apr 22, 2018 4:50 pm
motorcyclesarecool wrote:
Sun Apr 22, 2018 3:34 pm
For a big transaction a single commission of $6.95 to buy VTI is cheaper than paying 6 bp of bid-ask spread for SPTM.
What do you think is the break-even point for a big enough single transaction to make paying the commission for VTI make sense?
If we take the 6 bp bid/ask for SPTM and 1 bp for VTI as given:

Code: Select all

6.95 / (.0006 - .0001)
// 13900
That means an order for $13,900 will break even on the bid/ask. When buying more than that, it's cheaper to pay the commission.

motorcyclesarecool
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by motorcyclesarecool » Sun Apr 22, 2018 5:16 pm

:shock:

I didn’t think it would be that small!

What can State Street do? Reverse split?
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by drk » Sun Apr 22, 2018 5:28 pm

motorcyclesarecool wrote:
Sun Apr 22, 2018 5:16 pm
:shock:

I didn’t think it would be that small!

What can State Street do? Reverse split?
That would be nice, but that spread is how SSGA can afford to offer such low ERs and pay TDA to feature these funds. :oops:

SlowMovingInvestor
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by SlowMovingInvestor » Sun Apr 22, 2018 5:36 pm

drk wrote:
Sun Apr 22, 2018 5:28 pm
motorcyclesarecool wrote:
Sun Apr 22, 2018 5:16 pm
:shock:

I didn’t think it would be that small!

What can State Street do? Reverse split?
That would be nice, but that spread is how SSGA can afford to offer such low ERs and pay TDA to feature these funds. :oops:
Note that SPDR (the largest, most liquid SSGA ETF) is not among the list of commission free ETFs at TDAM. I'm guessing that ETF has enough volume that SSGA is not willing to pay TDAM to carry it commission free.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by Outafter20 » Sun Apr 22, 2018 6:37 pm

SlowMovingInvestor wrote:
Sun Apr 22, 2018 5:36 pm
drk wrote:
Sun Apr 22, 2018 5:28 pm
motorcyclesarecool wrote:
Sun Apr 22, 2018 5:16 pm
:shock:

I didn’t think it would be that small!

What can State Street do? Reverse split?
That would be nice, but that spread is how SSGA can afford to offer such low ERs and pay TDA to feature these funds. :oops:
Note that SPDR (the largest, most liquid SSGA ETF) is not among the list of commission free ETFs at TDAM. I'm guessing that ETF has enough volume that SSGA is not willing to pay TDAM to carry it commission free.
You mean SPY?

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by SlowMovingInvestor » Sun Apr 22, 2018 6:41 pm

Outafter20 wrote:
Sun Apr 22, 2018 6:37 pm
SlowMovingInvestor wrote:
Sun Apr 22, 2018 5:36 pm
Note that SPDR (the largest, most liquid SSGA ETF) is not among the list of commission free ETFs at TDAM. I'm guessing that ETF has enough volume that SSGA is not willing to pay TDAM to carry it commission free.
You mean SPY?
Yes. SPDR is what it was called earlier.

motorcyclesarecool
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by motorcyclesarecool » Sun Apr 22, 2018 7:57 pm

drk wrote:
Sun Apr 22, 2018 5:28 pm

That would be nice, but that spread is how SSGA can afford to offer such low ERs and pay TDA to feature these funds. :oops:
How does State Street make money from a spread in the secondary market? I figured it was HFTs and other arbitrageurs.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

aristotelian
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by aristotelian » Sun Apr 22, 2018 8:08 pm

drk wrote:
Sun Apr 22, 2018 5:00 pm
TIAX wrote:
Sun Apr 22, 2018 4:50 pm
motorcyclesarecool wrote:
Sun Apr 22, 2018 3:34 pm
For a big transaction a single commission of $6.95 to buy VTI is cheaper than paying 6 bp of bid-ask spread for SPTM.
What do you think is the break-even point for a big enough single transaction to make paying the commission for VTI make sense?
If we take the 6 bp bid/ask for SPTM and 1 bp for VTI as given:

Code: Select all

6.95 / (.0006 - .0001)
// 13900
That means an order for $13,900 will break even on the bid/ask. When buying more than that, it's cheaper to pay the commission.
And that's assuming you get the worst end of the bid/ask. With a limit order it's possible you come out on the winning side or at least narrow the gap. So you may be talking about 2 or 3 basis points.

motorcyclesarecool
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by motorcyclesarecool » Mon Apr 23, 2018 10:00 am

OK, now I’m seeing a penny spread on SPTM. That’s 3bp. Therefore $34,750 is the point at which it becomes cheaper to pay a $6.95 commission. Not as bad as I thought.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by TIAX » Mon Apr 23, 2018 2:46 pm

motorcyclesarecool wrote:
Mon Apr 23, 2018 10:00 am
OK, now I’m seeing a penny spread on SPTM. That’s 3bp. Therefore $34,750 is the point at which it becomes cheaper to pay a $6.95 commission. Not as bad as I thought.
I suppose for 401(k)s at TDA, it only makes sense to pay commissions and buy Vanguard funds if you rollover large assets into TDA.

motorcyclesarecool
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by motorcyclesarecool » Mon Apr 23, 2018 5:53 pm

TIAX wrote:
Mon Apr 23, 2018 2:46 pm
motorcyclesarecool wrote:
Mon Apr 23, 2018 10:00 am
OK, now I’m seeing a penny spread on SPTM. That’s 3bp. Therefore $34,750 is the point at which it becomes cheaper to pay a $6.95 commission. Not as bad as I thought.
I suppose for 401(k)s at TDA, it only makes sense to pay commissions and buy Vanguard funds if you rollover large assets into TDA.
And only if one is forced to roll over those assets in cash.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

TIAX
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by TIAX » Tue Apr 24, 2018 2:06 pm

motorcyclesarecool wrote:
Mon Apr 23, 2018 5:53 pm
TIAX wrote:
Mon Apr 23, 2018 2:46 pm
motorcyclesarecool wrote:
Mon Apr 23, 2018 10:00 am
OK, now I’m seeing a penny spread on SPTM. That’s 3bp. Therefore $34,750 is the point at which it becomes cheaper to pay a $6.95 commission. Not as bad as I thought.
I suppose for 401(k)s at TDA, it only makes sense to pay commissions and buy Vanguard funds if you rollover large assets into TDA.
And only if one is forced to roll over those assets in cash.
Good point but how common is it for 401(k)s to do rollovers in-kind?

GetMeToRetirement
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by GetMeToRetirement » Tue Apr 24, 2018 2:35 pm

livesoft wrote:
Wed Feb 28, 2018 9:21 am
I will always consider a limit order when using SPTM.
I also use limit orders for about $500/month of SPTM within my HSA at TDA. Works for me.

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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by livesoft » Tue Apr 24, 2018 3:12 pm

Note: While I always consider a limit order for SPTM and other ETFs, I don't always use a limit order and often use a market order.
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TIAX
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Re: Opinions on SPTM ETF in taxable for US stock index fund

Post by TIAX » Thu Apr 26, 2018 8:18 am

livesoft wrote:
Tue Apr 24, 2018 3:12 pm
Note: While I always consider a limit order for SPTM and other ETFs, I don't always use a limit order and often use a market order.
What criteria do you use to decide whether to use a limit order or a market order?

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