VSMAX (Small Cap fund) or VEXAX (Extended Mkt fund)?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
golfallday
Posts: 118
Joined: Sat Feb 14, 2009 3:43 am
Location: College Point, NY

VSMAX (Small Cap fund) or VEXAX (Extended Mkt fund)?

Post by golfallday »

Which do you prefer for a small cap allocation? These are Admiral Class funds with .17 and .16 ERs. Vanguard's Small Cap Growth and Small Cap Value funds don't offer Admiral shares.
User avatar
wander
Posts: 3574
Joined: Sat Oct 04, 2008 9:10 am

Post by wander »

The name says for itself: VSMAX.
sendai
Posts: 42
Joined: Fri May 13, 2011 12:15 pm

Post by sendai »

wander wrote:The name says for itself: VSMAX.
+1. VEXAX is (very roughly) half mid caps and half small caps.
rwwoods
Posts: 1312
Joined: Thu Jun 07, 2007 7:54 pm
Location: The Villages, Florida

Post by rwwoods »

I prefer Small Cap Value over Small Cap. iShares Small Cap 600 Value (IJS)
"I'm not so much concerned about the return on my money as the return of my money" - Will Rogers
User avatar
nisiprius
Advisory Board
Posts: 42857
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius »

Well, I don't tilt and I don't slice-and-dice, so take this for what it's worth...

But my opinion is that the Extended Market fund is "for" a very specific purpose. I'm not sure why it isn't spelled out. It was created before the Total Stock Market Fund, and its purpose is to mix with Vanguard Index 500 in order to own the total market. In principle I don't know why it should still exist, but in practice it would be difficult and pointless to discontinue it.

I suppose that even today, if you are a taxable investor, it might well be better to move from Index 500 to Total Stock Market by new purchases of Extended Market than by exchanging Index 500 for Total Stock Market.

Obviously you can use it in ways it isn't intended for, just as people buy the Managed Payout funds and then reinvest dividends instead of using the managed payout feature.

If I were going to slice-and-dice, that is if I wanted to control my large/mid/small allocation, it seems to me that I'd want to go all the way, with separate mid-cap and small-cap funds so I could tune the mixture to whatever I thought was appropriate. I don't know why I'd reject the fixed large/mid/small proportions in Total Stock Market index, only to accept the fixed mid/small blend in the Extended Market fund.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Topic Author
golfallday
Posts: 118
Joined: Sat Feb 14, 2009 3:43 am
Location: College Point, NY

Post by golfallday »

Great help; thanks very much!! I use VIIIX and VBTIX in my 457 plan; and VTIAX in my IRA. I don't plan to slice and dice to the point of the Coffeehouse Model or Merriman's Ultimate Buy and Hold, but I would like exposure to smaller companies in US. Leaning towards VSMAX in IRA. Thanks again.
User avatar
SpringMan
Posts: 5422
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Post by SpringMan »

FSEMX, Spartan Ext Market Index, is a great option for folks with Fidelity with its .1% ER. Fidelity has no true small cap index funds (without using ETFs) and their actively managed small cap funds are expensive.
Best Wishes, SpringMan
livesoft
Posts: 75123
Joined: Thu Mar 01, 2007 8:00 pm

Post by livesoft »

I use both SmallCapValue index and ExtendedMarketIndex for the following reasons:

If I had already TotalStockMarket, then I already have the mid/small caps of Extended market. But I don't have a TotalStockMarket index fund. Instead I own an S&P500 index fund and a LargeCap index fund, I use ExtendedMarketIndex to give a complete total market index albeit with an overweight towards small/mid.

Then I add SmallCapValue index to tilt to small-cap and to value.
Wiki This signature message sponsored by sscritic: Learn to fish.
Default User BR
Posts: 7501
Joined: Mon Dec 17, 2007 7:32 pm

Post by Default User BR »

nisiprius wrote:But my opinion is that the Extended Market fund is "for" a very specific purpose. I'm not sure why it isn't spelled out. It was created before the Total Stock Market Fund, and its purpose is to mix with Vanguard Index 500 in order to own the total market. In principle I don't know why it should still exist, but in practice it would be difficult and pointless to discontinue it.
Many 401(k) plans and the like do not offer total market (mine is one). Having a completion fund is useful to people who only have a 500 fund in their plan.



Brian
Miskatonic
Posts: 97
Joined: Sun Feb 20, 2011 6:08 pm

Post by Miskatonic »

So.....holding Vanguard Total Stock Market Index (VTSMX or VTSAX) along with Vanguard Extended Market Index (VTXMX or VTXAX) is not wise because of the midcap overlap?
livesoft
Posts: 75123
Joined: Thu Mar 01, 2007 8:00 pm

Post by livesoft »

It is perfectly wise ... if you want to overweight mid and small cap stocks.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
grabiner
Advisory Board
Posts: 29139
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: VSMAX (Small Cap fund) or VEXAX (Extended Mkt fund)?

Post by grabiner »

golfallday wrote:Which do you prefer for a small cap allocation? These are Admiral Class funds with .17 and .16 ERs. Vanguard's Small Cap Growth and Small Cap Value funds don't offer Admiral shares.
What is your large cap allocation? Extended Market is a complement to 500 Index; Small-Cap Index is a complement to Large-Cap Index. If you hold one of those funds already (or something similar) and are trying to replicate the total market, that should determine what you use. If you are trying to overweight small-caps, that is better done with Small-Cap Index, which has a lower cap range (and if you use ETFs, the S&P and Russell small-cap ETFs have an even lower range).
Wiki David Grabiner
User avatar
FabLab
Posts: 1127
Joined: Mon Oct 18, 2010 12:15 pm

Post by FabLab »

nisiprius wrote: But my opinion is that the Extended Market fund is "for" a very specific purpose. I'm not sure why it isn't spelled out. It was created before the Total Stock Market Fund, and its purpose is to mix with Vanguard Index 500 in order to own the total market.
That's certainly the way I used it as well, to complement the 500 to round out the total U.S. market. Once the Total Market Admiral appeared, I converted ASAP. Saved me from having to be concerned with the amounts of each routine deposit relative to market weightings. Just much easier for this traveler.
The fundamental things apply as time goes by -- Herman Hupfeld
User avatar
SVariance1
Posts: 1300
Joined: Mon Jun 20, 2011 11:27 am
Location: Philadelphia Area

Post by SVariance1 »

Since I do not generally invest in growth, I would have to go with the Small Cap Value Fund.

Oops misread the question. I don't like either of the choices.
Last edited by SVariance1 on Thu Jul 14, 2011 4:25 pm, edited 1 time in total.
Mike
YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: VSMAX (Small Cap fund) or VEXAX (Extended Mkt fund)?

Post by YDNAL »

golfallday OP wrote:VSMAX (Small Cap fund) or VEXAX (Extended Mkt fund)?

Which do you prefer for a small cap allocation?
golfallday wrote:I use VIIIX and VBTIX in my 457 plan; and VTIAX in my IRA. I don't plan to slice and dice to the point of the Coffeehouse Model or Merriman's Ultimate Buy and Hold, but I would like exposure to smaller companies in US. Leaning towards VSMAX in IRA.
If you want to overweight Small Caps at the expense of Mid Caps, then, VSMAX would be choice.
  • 78/22 VIIII/VEXAX
    23 24 23
    06 07 07
    03 03 03
    Matches the Total Market's cap weights.

    78/22 VIIIX/VSMAX
    23 24 22
    05 05 06
    05 05 05
    Overweights Small Caps at the expense of Mid Caps.
If you want to underweight Growth (Mid/Small) and overweight Small Caps and Small Value, then SCV (VISVX) would be the choice:
  • 78/22 VIIII/VISVX
    23 24 22
    06 06 04
    09 06 02
What do you want?
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
Post Reply