Mankiw suggests Vanguard Total World Stock ETF

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boggler
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Mankiw suggests Vanguard Total World Stock ETF

Post by boggler » Fri May 24, 2013 11:51 am

http://www.nytimes.com/2013/05/19/busin ... omist.html
Which brings me back to my mother’s question: If I could pick just one stock for someone to buy, what would it be? I would now suggest something like the Vanguard Total World Stock exchange-traded fund, which started trading in 2008. In one package, you can get low cost and maximal diversification. It may not be as exciting as trying to pick the next Apple or Google, but you’ll sleep better at night.

Cash
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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by Cash » Sat May 25, 2013 9:52 pm

Nice. It's starting to catch on!

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by asset_chaos » Sun May 26, 2013 5:49 am

I didn't read the article, but the quote sounds like he's fudging the issue or setting up a straw man. I don't consider the total world etf or any other broad market etf to be "just one stock". Though, since one can trade etfs "all day in real time", I can see how the times could get confused.
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dailybagel
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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by dailybagel » Sun May 26, 2013 7:51 am

Also posted, without too much discussion, here:
http://www.bogleheads.org/forum/viewtop ... 0&t=116707

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by nisiprius » Sun May 26, 2013 9:36 am

asset_chaos wrote:I didn't read the article, but the quote sounds like he's fudging the issue or setting up a straw man. I don't consider the total world etf or any other broad market etf to be "just one stock". Though, since one can trade etfs "all day in real time", I can see how the times could get confused.
Well, it sort of depends on the context in which one should interpret his mother's question, which was "O.K. Mr. Smarty-Pants, what stock should I buy now?" And of course, it is evasive; as he says, "Unfortunately, she has never been happy with my answers, which are usually evasive." Without knowing her mother's relationship with the stock market, it's hard to know how serious a question it is and what her understanding of "stock" might be.

One perfectly reasonable definition of "stock" might be "thingies sold in 'stock' markets." Although I suppose that means that logically, if you buy motor oil or laundery detergent at a "Foodland" supermarket...
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rustymutt
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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by rustymutt » Sun May 26, 2013 11:04 am

.19% ER is more than VTI, and VXUS averaged 50/50 blend would have a ER of .12%
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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by LadyGeek » Sun May 26, 2013 9:25 pm

dailybagel wrote:Also posted, without too much discussion, here:
http://www.bogleheads.org/forum/viewtop ... 0&t=116707
The link in human readable form: Mankiw on indexing. This thread discusses the same article, but from a general indexing perspective.
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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by pascalwager » Mon May 27, 2013 2:16 am

.19% ER is more than VTI, and VXUS averaged 50/50 blend would have a ER of .12%
Also, if you check the VG VT screen for the current US/Intl ratio (47.4/52.6) and initially purchase the other two funds in this ratio, you won't need to "rebalance" for a long time. Of course, all subsequent new purchases/withdrawals have to be made at the current ratio.

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by Cash » Mon May 27, 2013 2:47 pm

rustymutt wrote:.19% ER is more than VTI, and VXUS averaged 50/50 blend would have a ER of .12%
Wow!...

[sarcasm]
Last edited by Cash on Mon May 27, 2013 5:19 pm, edited 1 time in total.

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by DaveS » Mon May 27, 2013 3:06 pm

Yes that is one problem with the world fund, it has a higher expense ratio than if you held the total US market etf and Total International etf. Another problem is the number of stocks. Vanguard World has about 4k stocks if you bought total US and Total Int. You would have about 6k stocks. Dave

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by pascalwager » Mon May 27, 2013 3:18 pm

VT has 4933 companies.

VTI has 3317 companies and VXUS has 6498 companies, which adds up to 9815 companies using the two funds instead of VT.

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by boggler » Mon May 27, 2013 3:38 pm

DaveS wrote:Yes that is one problem with the world fund, it has a higher expense ratio than if you held the total US market etf and Total International etf. Another problem is the number of stocks. Vanguard World has about 4k stocks if you bought total US and Total Int. You would have about 6k stocks. Dave
This will improve over time as more people buy into VT.

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Re: Mankiw suggests Vanguard Total World Stock ETF

Post by Cash » Mon May 27, 2013 5:21 pm

boggler wrote:
DaveS wrote:Yes that is one problem with the world fund, it has a higher expense ratio than if you held the total US market etf and Total International etf. Another problem is the number of stocks. Vanguard World has about 4k stocks if you bought total US and Total Int. You would have about 6k stocks. Dave
This will improve over time as more people buy into VT.
And I have yet to see anyone demonstrate that a meaningful difference exists even today. Vanguard is very good at sampling.

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