vtmfx, vwelx, vbiax - after tax returns

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sixtyforty
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vtmfx, vwelx, vbiax - after tax returns

Post by sixtyforty » Fri Dec 21, 2018 9:12 am

I was looking at investing in vtmfx in my taxable account, since my understanding is that this fund is supposed to be more tax efficient compared to vwelx and vbiax. However when I look at the after-tax returns on these funds, vwelx and vbiax seem to be higher than vtmfx over most years. Yes, there is a larger difference between before and after tax compared to vtmfx, but at the end of the day it comes down to the return on the investment. Based on these numbers it tells me that someone owning vbiax in a taxable account would have done better than someone owning vtmfx in the same account. Am I understanding this correctly ?

https://investor.vanguard.com/mutual-fu ... ance/vwelx

https://investor.vanguard.com/mutual-fu ... ance/vbiax

https://investor.vanguard.com/mutual-fu ... ance/vtmfx
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

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SpringMan
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Re: vtmfx, vwelx, vbiax - after tax returns

Post by SpringMan » Fri Dec 21, 2018 9:30 am

VTMFX is 50/50 stocks to bonds, VBIAX is 60/40. and VWELX is roughly 65/35 so what you say makes sense.
Best Wishes, SpringMan

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grabiner
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Re: vtmfx, vwelx, vbiax - after tax returns

Post by grabiner » Fri Dec 21, 2018 11:05 pm

SpringMan wrote:
Fri Dec 21, 2018 9:30 am
VTMFX is 50/50 stocks to bonds, VBIAX is 60/40. and VWELX is roughly 65/35 so what you say makes sense.
And you can see the effect now. This year, with the stock market down, Tax-Managed Balanced is down less than the other two, even before tax.

If you want the higher risk level for a taxable investment in a high bracket, you have to use separate stock and bond funds. Balanced Index could be replaced by 60% Total Stock Market and 40% Intermediate-Term Tax-Exempt (or a fund from your state if one exists).
Wiki David Grabiner

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