Would you buy Total World index if it had Admiral Shares?

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warner25
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Re: Would you buy Total World index if it had Admiral Shares

Post by warner25 » Wed Jan 14, 2015 7:44 am

bonn and Newbvestor,

You are making the standard argument for a global portfolio: diversification is good, concentrated bets are bad. Got it, and I'm not saying that's wrong. But IlliniDave's point was not about expecting the US market to perform better than that of Germany, Italy, Russia, or wherever.

His point was that it's relatively recent that a person can invest globally, and this may not always continue. Today people of country X are free to invest in country Y, and vice versa. But if tensions (i.e. protectionism, breakdown of trade, economic sanctions, cold war, etc.) develop between countries X and Y, then investors from each may suffer (due to assets being frozen or confiscated) even if markets in both countries continue to deliver strong returns.

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papito23
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Re: Would you buy Total World index if it had Admiral Shares

Post by papito23 » Wed Jan 14, 2015 8:23 am

nisiprius wrote: (I'm stating this in gray, to symbolize a "gray area" and in hopes of not starting a round of a familiar and sterile debate here. As to global cap-weighting itself, for the record, my personal $0.02 is that the importance of international equities is wildly overstated, any "diversification" effect is weak, and therefore it hardly matters how much international you have because it just doesn't do anything all that different from domestic. Yes, just like active funds or dividend stocks or value tilts or anything different from a total market index fund, the periods of chance outperformance and underperformance can last long enough to get people excited and apparently "prove" things that mysteriously vanish later).
Just because it's gray doesn't mean I can't find it ;)

Since we're on the topic of diminishing returns for brain-effort invested, I went back to our discussion about the search for the oh-so-perfect blend of US+Int'l...

We showed that someone with $250K in stocks (as of 7/30/14) who had tilted 10% in the wrong direction (towards international) for 15 years ended up four tenths of 1% poorer.

Since I'm looking at upgrading the MPG of my fleet, let's consider another common financial decision as a comparison. Let's imagine that 15 year ago the investor instead said, "Nah, instead of taking a coin-flip guess as to which fund does better, I'll get serious about driving efficiency. I'll pump up my car's tires, stop going through drive-thru's, drive like grandma, learn to read traffic and coast properly, unload all the junk in the trunk, change my engine air filter, etc." Our investor permanently boosted his 20-mpg gas guzzler to a slightly less guzzling 24.5-mpg vehicle, and invested the difference in a savings account bearing 2% a year.

Ok, I crunched the numbers ($3.50/gal gas, 12,000miles/yr)... changing his driving behavior was a guaranteed savings >3x greater than having guessed the tilt 10% in the direction of the winning fund.
A thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise. -Aldo Leopold's Golden Rule of Ecology

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Noobvestor
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Re: Would you buy Total World index if it had Admiral Shares

Post by Noobvestor » Thu Jan 15, 2015 9:23 pm

warner25 wrote:bonn and Newbvestor,

You are making the standard argument for a global portfolio: diversification is good, concentrated bets are bad. Got it, and I'm not saying that's wrong. But IlliniDave's point was not about expecting the US market to perform better than that of Germany, Italy, Russia, or wherever.

His point was that it's relatively recent that a person can invest globally, and this may not always continue. Today people of country X are free to invest in country Y, and vice versa. But if tensions (i.e. protectionism, breakdown of trade, economic sanctions, cold war, etc.) develop between countries X and Y, then investors from each may suffer (due to assets being frozen or confiscated) even if markets in both countries continue to deliver strong returns.
OK, I see the point better now and it is an interesting one - I wasn't really following and appreciate the explanation. That said, in a world where any market that is large enough in size ceases relations *entirely* with the United States, well, I can't quite picture it. I took the liberty of copy/pasting the countries in Vanguard's global index fund that represented 1% or more of the global market:

United States 51.7%
Japan 7.6%
United Kingdom 7.2%
Canada 3.6%
France 3.0%
Switzerland 3.0%
Germany 2.9%
Australia 2.5%
China 1.9%
Korea 1.5%
Taiwan 1.4%
Hong Kong 1.2%
Spain 1.2%
India 1.1%
Sweden 1.0%
Brazil 1.0%

On that list I could see one or two that could have that kind of falling out, each representing at most a few percent. If Japan, the UK, Canada, France, etc... stopped doing business with the US and froze holdings, etc..., I think that would make a case for holding more Treasuries or gold or cash or guns or something, not US stocks. There is also a country or two right now that don't quite make this list that are stirring some trouble and which have been on the wrong end of US sanctions but which hasn't cut out US investors as yet. Anyway, can't go further without getting political ;)

Either way, I return to my core philosophy (reflected in the Larry quote currently in my signature line) - I don't know the future, so I spread my bets and take what the markets give me.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Would you buy Total World index if it had Admiral Shares

Post by tj » Fri Jan 16, 2015 3:54 pm

I know when VT first came out, folks were hesitant to use it because of low volume vs VTI and VSUX and the bid/ask spread...is that still relevant?

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Re: Would you buy Total World index if it had Admiral Shares

Post by Cash » Sat Jan 17, 2015 7:59 am

tj wrote:I know when VT first came out, folks were hesitant to use it because of low volume vs VTI and VSUX and the bid/ask spread...is that still relevant?
No.

https://advisors.vanguard.com/VGApp/iip ... daskspread

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Re: Would you buy Total World index if it had Admiral Shares

Post by bonn » Mon Jan 26, 2015 4:15 am

warner25 wrote:bonn and Newbvestor,

You are making the standard argument for a global portfolio: diversification is good, concentrated bets are bad. Got it, and I'm not saying that's wrong. But IlliniDave's point was not about expecting the US market to perform better than that of Germany, Italy, Russia, or wherever.

His point was that it's relatively recent that a person can invest globally, and this may not always continue. Today people of country X are free to invest in country Y, and vice versa. But if tensions (i.e. protectionism, breakdown of trade, economic sanctions, cold war, etc.) develop between countries X and Y, then investors from each may suffer (due to assets being frozen or confiscated) even if markets in both countries continue to deliver strong returns.
This is political risk that everyone agrees is part of a world portfolio and that I even specifically mentioned in my response. It's also part of a concentrated home-country bet. It's true that political risk can be greater for non-citizens, but even political risk can be diversified, in that e.g. a US against the entire world war is unlikely to happen. Currency risk seems more systemic than foreign political risk in that way. Though it does depend on where your citizenship lies.

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Re: Would you buy Total World index if it had Admiral Shares

Post by tj » Tue Jan 27, 2015 8:39 pm

Ive actually now gone to VTWSX entirely for my stock allocation of my portfolio. I expect to the expense ratio to go down as assets grow. I expect Admiral Shares to appear eventually.


To me, it just doesn't make sense to avoid companies like Shell, Nestle, Unilever etc while having 'extra' exposure to Apple, Exxon etc. I like that I'm invested in basically all currencies. As a 29 year old, this seems the way to go. Am I missing out on some foreign tax credit in my Roth IRA? Sure, but, I'm also not paying income taxes on the dividends, so it's kind of a wash.

Right now, most of my portfolio is in tax advantaged accounts, so I'm not worried about having capital gains if I want to go exclusively domestic in later years of life (though that seems unlikely).

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Re: Would you buy Total World index if it had Admiral Shares

Post by SteveB3005 » Tue Jan 27, 2015 8:57 pm

After years of tilting, it's been my equity tool of choice in ETF form for three years. I'm not going to create a taxable event with my value and small funds, but all new money and tax loss harvesting moves, funnel back into VT.

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fortyofforty
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Re: Would you buy Total World index if it had Admiral Shares

Post by fortyofforty » Tue Jan 27, 2015 10:55 pm

I wish it did. It's still my favorite stock fund, because of Boglehead principles, though. Come on, Vanguard, how about an Admiral Fund?
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

Ignatious P. Daily
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Re: Would you buy Total World index if it had Admiral Shares

Post by Ignatious P. Daily » Wed Jan 28, 2015 7:15 am

If you look at the history of VT, the plan for the fund becomes self-evident. When it was first launched it held fewer than 2500 securities and was a large-cap only fund. Today it holds 6,894 securities and is all-cap. So the trend is to use increases in NAV to broaden diversification to the point that the fund lives up to its name. This leads to the question of when this trend will stop and by extension, because this is Vanguard, when further NAV increases will lead to lower expenses and Admiral shares. My SWAG: VTI (3,790 holdings) + VXUS (5,514 holdings) = 9,304 - VT (6,894 holdings) = 2,410 delta. This delta is represented almost entirely by smaller capitalization companies with little global market share. I would expect that Vanguard continue to expand holdings within VT until this gap is closed, followed by a period of reduced ER's - likely including admiral shares. My guess is that this transition is 2-5 years away.

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Re: Would you buy Total World index if it had Admiral Shares

Post by tj » Wed Jan 28, 2015 10:56 am

Ignatious P. Daily wrote:If you look at the history of VT, the plan for the fund becomes self-evident. When it was first launched it held fewer than 2500 securities and was a large-cap only fund. Today it holds 6,894 securities and is all-cap. So the trend is to use increases in NAV to broaden diversification to the point that the fund lives up to its name. This leads to the question of when this trend will stop and by extension, because this is Vanguard, when further NAV increases will lead to lower expenses and Admiral shares. My SWAG: VTI (3,790 holdings) + VXUS (5,514 holdings) = 9,304 - VT (6,894 holdings) = 2,410 delta. This delta is represented almost entirely by smaller capitalization companies with little global market share. I would expect that Vanguard continue to expand holdings within VT until this gap is closed, followed by a period of reduced ER's - likely including admiral shares. My guess is that this transition is 2-5 years away.

They are already reducing the ER's. VTWSX is 30bps. It also used to have a purchase and redemeption fee.

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galeno
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Re: Would you buy Total World index if it had Admiral Shares

Post by galeno » Wed Jan 28, 2015 11:04 am

The cheapest way to make VT = 50% SCHB + 40% SCHF + 10% SCHE. ER = 0.07%.

Second cheapest VT = 50% VTI + 50% VXUS. ER = 0.11%.

We decided that paying 8-11 BPS more for VT is worth the simplicity of letting the FTSE all-world equity index choose our USA / non-USA / EM allocations.

Our current port looks like this: 60% VT + 35% (offshore) PIGIX + 5% CASH. TER = 0.7%

Our future port will look like this: 60% VWLD (=VT) + 20% IUAG (=AGG) + 15% CORP (=PIGIX) + 5% CASH. TER = 0.3%.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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fortyofforty
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Re: Would you buy Total World index if it had Admiral Shares

Post by fortyofforty » Thu Jan 29, 2015 10:57 am

From Vanguard:
Your suggestion to offer an Admiral Shares class for Vanguard Total World Stock Index Fund Investor Shares (VTWSX) has been forwarded to the Vanguard Brokerage management team for review and consideration. We welcome your feedback and hope you'll continue to share your thoughts on how we can further enhance our products and services and serve you better.
We will see.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

tj
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Re: Would you buy Total World index if it had Admiral Shares

Post by tj » Sun Feb 01, 2015 10:26 pm

My 401(k) does not have Total World, but it does have DFA Global Equity. It's clearly diversified with over 11,000 stocks, though obviously not allocated the same as Total World:

http://us.dimensional.com/media/documen ... gs_232.pdf

I may consider this, though not sure if Nationwide will allow the purchase to go through.

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Re: Would you buy Total World index if it had Admiral Shares

Post by FredL » Tue Feb 03, 2015 3:32 pm

Is there anyone know how to calculate the difference of return of 0.14% er? I think it is very small, probable $20 a year for $10,000. I think convenience is more important than the small difference.

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fortyofforty
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Re: Would you buy Total World index if it had Admiral Shares

Post by fortyofforty » Tue Feb 03, 2015 4:19 pm

FredL wrote:Is there anyone know how to calculate the difference of return of 0.14% er? I think it is very small, probable $20 a year for $10,000. I think convenience is more important than the small difference.
It's partly the principle of the issue, to me. But you're probably right. I get the whole world, without worrying if foreign stocks should be 50%, 45%, 55%, or somewhere around there. It's just done. I am a bit confused as to why we're missing thousands of stocks compared with the Total Stock and Total International, though. Strange.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Toons
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Re: Would you buy Total World index if it had Admiral Shares

Post by Toons » Tue Feb 03, 2015 4:19 pm

Yes :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Would you buy Total World index if it had Admiral Shares

Post by tj » Tue Feb 03, 2015 10:56 pm

fortyofforty wrote:
FredL wrote:Is there anyone know how to calculate the difference of return of 0.14% er? I think it is very small, probable $20 a year for $10,000. I think convenience is more important than the small difference.
It's partly the principle of the issue, to me. But you're probably right. I get the whole world, without worrying if foreign stocks should be 50%, 45%, 55%, or somewhere around there. It's just done. I am a bit confused as to why we're missing thousands of stocks compared with the Total Stock and Total International, though. Strange.

Not enough assets to justify it. As previously mentioned, I expect that to change as the fund grows. But, if you click the link I posted to the DFA Global Equity holdings...those extra few thousands of stocks hardly have any allocation towards them. You wonder if the added cost to hold such tiny holdings are worth it.

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fortyofforty
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Re: Would you buy Total World index if it had Admiral Shares

Post by fortyofforty » Tue Feb 03, 2015 11:06 pm

tj wrote:But, if you click the link I posted to the DFA Global Equity holdings...those extra few thousands of stocks hardly have any allocation towards them. You wonder if the added cost to hold such tiny holdings are worth it.
Ah, the eternal S&P 500 versus the Total Stock Market question, writ global. I don't have the answer to that one.
Indexing works, not because of magic, but because of math. | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

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Re: Would you buy Total World index if it had Admiral Shares

Post by bogledogle87 » Mon Apr 01, 2019 1:53 pm

G-Money wrote:
Thu Jun 20, 2013 4:39 pm
Day9 wrote:My question for you is: How low would the expense ratio for Total World index fund have to be to get you to buy it?
I'll say 0.10. I would not even consider it until its ER matched the aggregate ER of VTSAX/VTIAX. Also, it currently holds significantly fewer stocks than the combo, so even if the cost were the same, I'd likely consider the Total World fund to be inferior.

As it is, I'm overweight US (my US/ex-US split is 60/40), so I probably wouldn't bother with Total World anyway.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
Last edited by bogledogle87 on Mon Apr 01, 2019 1:56 pm, edited 2 times in total.
VTWAX and chill

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Re: Would you buy Total World index if it had Admiral Shares

Post by bogledogle87 » Mon Apr 01, 2019 1:54 pm

InvestorNewb wrote:
Wed Jun 19, 2013 4:32 pm
Day9 wrote:My question for you is: How low would the expense ratio for Total World index fund have to be to get you to buy it?
I would be tempted to use Total World if it had an expense ratio of 0.11% - this is the average expense ratio for VTI + VXUS.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
VTWAX and chill

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Re: Would you buy Total World index if it had Admiral Shares

Post by bogledogle87 » Mon Apr 01, 2019 1:59 pm

Cash wrote:
Wed Jun 19, 2013 9:27 pm
Mark my words a few years hence: Total World is the next logical extension of the Boglehead philosophy.
This comment has aged very well! I'm curious - Has the introduction of VTWAX at 0.10% and the lowering of VT to 0.09% changed anything for you almost 6 years later?
VTWAX and chill

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Re: Would you buy Total World index if it had Admiral Shares

Post by Cash » Mon Apr 01, 2019 8:15 pm

bogledogle87 wrote:
Mon Apr 01, 2019 1:59 pm
Cash wrote:
Wed Jun 19, 2013 9:27 pm
Mark my words a few years hence: Total World is the next logical extension of the Boglehead philosophy.
This comment has aged very well! I'm curious - Has the introduction of VTWAX at 0.10% and the lowering of VT to 0.09% changed anything for you almost 6 years later?
Nope, the ETF is still my single largest holding. Amazing how far the ER has dropped over the years. I might buy the mutual fund one day if I open a VG account. I still highly recommend Total World.

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Re: Would you buy Total World index if it had Admiral Shares

Post by InvestorNewb » Thu Apr 04, 2019 2:28 pm

bogledogle87 wrote:
Mon Apr 01, 2019 1:54 pm
InvestorNewb wrote:
Wed Jun 19, 2013 4:32 pm
Day9 wrote:My question for you is: How low would the expense ratio for Total World index fund have to be to get you to buy it?
I would be tempted to use Total World if it had an expense ratio of 0.11% - this is the average expense ratio for VTI + VXUS.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
I haven't. I have stayed true to my original purchases of VTI+VXUS+VNQ+VCN. I am very happy with the results.

I have been holding those ETFs since 2012 and hope to be holding them for decades more :)
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: Would you buy Total World index if it had Admiral Shares

Post by jhfenton » Thu Apr 04, 2019 6:44 pm

InvestorNewb wrote:
Thu Apr 04, 2019 2:28 pm
bogledogle87 wrote:
Mon Apr 01, 2019 1:54 pm
InvestorNewb wrote:
Wed Jun 19, 2013 4:32 pm
Day9 wrote:My question for you is: How low would the expense ratio for Total World index fund have to be to get you to buy it?
I would be tempted to use Total World if it had an expense ratio of 0.11% - this is the average expense ratio for VTI + VXUS.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
I haven't. I have stayed true to my original purchases of VTI+VXUS+VNQ+VCN. I am very happy with the results.

I have been holding those ETFs since 2012 and hope to be holding them for decades more :)
What is VCN? There doesn't seem to be a US-listed ETF with that ticker. The others I knew off the top of my head.

Big Dog
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Re: Would you buy Total World index if it had Admiral Shares?

Post by Big Dog » Thu Apr 04, 2019 6:48 pm

nope, would not buy.

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Re: Would you buy Total World index if it had Admiral Shares

Post by gclancer » Thu Apr 04, 2019 6:53 pm

jhfenton wrote:
Thu Apr 04, 2019 6:44 pm
InvestorNewb wrote:
Thu Apr 04, 2019 2:28 pm
bogledogle87 wrote:
Mon Apr 01, 2019 1:54 pm
InvestorNewb wrote:
Wed Jun 19, 2013 4:32 pm
Day9 wrote:My question for you is: How low would the expense ratio for Total World index fund have to be to get you to buy it?
I would be tempted to use Total World if it had an expense ratio of 0.11% - this is the average expense ratio for VTI + VXUS.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
I haven't. I have stayed true to my original purchases of VTI+VXUS+VNQ+VCN. I am very happy with the results.

I have been holding those ETFs since 2012 and hope to be holding them for decades more :)
What is VCN? There doesn't seem to be a US-listed ETF with that ticker. The others I knew off the top of my head.
Funny, I knew off the top of my head from reading InvestorNewb’s signature line so many times. VCN is Vanguard Canada which I believe is listed on the Toronto exchange?

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Re: Would you buy Total World index if it had Admiral Shares

Post by jhfenton » Thu Apr 04, 2019 7:12 pm

gclancer wrote:
Thu Apr 04, 2019 6:53 pm
jhfenton wrote:
Thu Apr 04, 2019 6:44 pm
InvestorNewb wrote:
Thu Apr 04, 2019 2:28 pm
bogledogle87 wrote:
Mon Apr 01, 2019 1:54 pm
InvestorNewb wrote:
Wed Jun 19, 2013 4:32 pm


I would be tempted to use Total World if it had an expense ratio of 0.11% - this is the average expense ratio for VTI + VXUS.
2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
I haven't. I have stayed true to my original purchases of VTI+VXUS+VNQ+VCN. I am very happy with the results.

I have been holding those ETFs since 2012 and hope to be holding them for decades more :)
What is VCN? There doesn't seem to be a US-listed ETF with that ticker. The others I knew off the top of my head.
Funny, I knew off the top of my head from reading InvestorNewb’s signature line so many times. VCN is Vanguard Canada which I believe is listed on the Toronto exchange?
Thanks. I didn't even realize we had signatures, but I do see the signature now. I see in the settings that my preferences were set to not display signatures. I must have turned that off when I initially created an account based on my experience at other message boards. It's hardly necessary here.

VCN Canada was what turned up on my initial search, but I found it odd that a Toronto-listed ETF would be combined with 3 US ETFs.

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Re: Would you buy Total World index if it had Admiral Shares

Post by InvestorNewb » Thu Apr 04, 2019 8:08 pm

jhfenton wrote:
Thu Apr 04, 2019 7:12 pm
gclancer wrote:
Thu Apr 04, 2019 6:53 pm
jhfenton wrote:
Thu Apr 04, 2019 6:44 pm
InvestorNewb wrote:
Thu Apr 04, 2019 2:28 pm
bogledogle87 wrote:
Mon Apr 01, 2019 1:54 pm


2019 Follow up - Have you decided to buy VT at 0.09% or VTWAX at 0.10% !?
I haven't. I have stayed true to my original purchases of VTI+VXUS+VNQ+VCN. I am very happy with the results.

I have been holding those ETFs since 2012 and hope to be holding them for decades more :)
What is VCN? There doesn't seem to be a US-listed ETF with that ticker. The others I knew off the top of my head.
Funny, I knew off the top of my head from reading InvestorNewb’s signature line so many times. VCN is Vanguard Canada which I believe is listed on the Toronto exchange?
Thanks. I didn't even realize we had signatures, but I do see the signature now. I see in the settings that my preferences were set to not display signatures. I must have turned that off when I initially created an account based on my experience at other message boards. It's hardly necessary here.

VCN Canada was what turned up on my initial search, but I found it odd that a Toronto-listed ETF would be combined with 3 US ETFs.
Yes VCN is Vanguard Canada's All Cap Index ETF..only available to Canadian investors as far as I know. I hold VCN for tax reasons (in my tax-free account). If I were to hold US stocks in that account, the dividends get taxed. So I've chosen to keep it truly tax free this way.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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TimeRunner
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Re: Would you buy Total World index if it had Admiral Shares?

Post by TimeRunner » Thu Apr 04, 2019 8:14 pm

We're into the VT ETF (held at Fido) bigtime. Yay us, heh. :beer
One cannot enlighten the unconscious.

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Re: Would you buy Total World index if it had Admiral Shares?

Post by JustinR » Thu Apr 04, 2019 8:22 pm

I'll be into it once they have the same number of stocks and expense ratios as the separate funds. Simple as that.

Dominic
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Re: Would you buy Total World index if it had Admiral Shares?

Post by Dominic » Thu Apr 04, 2019 10:34 pm

I personally wouldn't.

It's a fine fund, but I like to have control over my US/international stock allocation. At some point, I might even want to exert some control over my US/international developed/emerging allocation.

This should give me a little bit better performance for a little bit less risk. Granted, it probably won't make much of a difference, but I like rebalancing, and taking advantage of it can't hurt.

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Re: Would you buy Total World index if it had Admiral Shares?

Post by UpperNwGuy » Fri Apr 05, 2019 5:04 am

Same here. I don't want to lose control of my US/ex-US allocation, so I will stay with my two current funds VTSAX and VTIAX. And, yes, I choose to hold less than the market weight of ex-US.

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Re: Would you buy Total World index if it had Admiral Shares?

Post by bogledogle87 » Fri Apr 05, 2019 8:57 am

JustinR wrote:
Thu Apr 04, 2019 8:22 pm
I'll be into it once they have the same number of stocks and expense ratios as the separate funds. Simple as that.
I think it all depends on how much you value the simplicity of a single fund. VTWAX/VT holds 1% less cash reserves than VTIAX + VTSAX, so you actually have a little bit more cash working for you with the single fund. Yes, there are 2,000 less stocks in Total World, but those represent less than 2% of the world market cap, according to the vanguard advisors profile. The 3 basis point difference is well worth the convenience for someone like me. I can swing $30 per $100,000 each year without feeling like I am missing out on much opportunity. My own tracking error in rebalancing to match global market cap will surely be greater than 3 bp.
VTWAX and chill

bogledogle87
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Re: Would you buy Total World index if it had Admiral Shares?

Post by bogledogle87 » Fri Apr 05, 2019 10:35 am

Dominic wrote:
Thu Apr 04, 2019 10:34 pm
I personally wouldn't.

It's a fine fund, but I like to have control over my US/international stock allocation. At some point, I might even want to exert some control over my US/international developed/emerging allocation.

This should give me a little bit better performance for a little bit less risk. Granted, it probably won't make much of a difference, but I like rebalancing, and taking advantage of it can't hurt.
UpperNwGuy wrote:
Fri Apr 05, 2019 5:04 am
Same here. I don't want to lose control of my US/ex-US allocation, so I will stay with my two current funds VTSAX and VTIAX. And, yes, I choose to hold less than the market weight of ex-US.
I started considering this fund after reading up on the research and merits of a 60/40 US/International portfolio (After drinking the 100% US Kool-aid and lucking out for a while). I was attracted to it by the simplicity and because the current 55/45 seemed close enough. But I realized though that Total World is still a very different approach than even 60/40 or 50/50 when looking long term. If investor has strong convictions for holding a fixed allocation, this fund is not for them anyway.

For me, I do find the global approach to be the ultimate implementation of passive equity indexing by removing all emotions and bias. I feel confident that I can justifiably stick with this approach if the US surges to 80% of world cap or falls to 20% and everything in between.
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Dominic
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Re: Would you buy Total World index if it had Admiral Shares?

Post by Dominic » Fri Apr 05, 2019 6:56 pm

bogledogle87 wrote:
Fri Apr 05, 2019 10:35 am
Dominic wrote:
Thu Apr 04, 2019 10:34 pm
I personally wouldn't.

It's a fine fund, but I like to have control over my US/international stock allocation. At some point, I might even want to exert some control over my US/international developed/emerging allocation.

This should give me a little bit better performance for a little bit less risk. Granted, it probably won't make much of a difference, but I like rebalancing, and taking advantage of it can't hurt.
UpperNwGuy wrote:
Fri Apr 05, 2019 5:04 am
Same here. I don't want to lose control of my US/ex-US allocation, so I will stay with my two current funds VTSAX and VTIAX. And, yes, I choose to hold less than the market weight of ex-US.
I started considering this fund after reading up on the research and merits of a 60/40 US/International portfolio (After drinking the 100% US Kool-aid and lucking out for a while). I was attracted to it by the simplicity and because the current 55/45 seemed close enough. But I realized though that Total World is still a very different approach than even 60/40 or 50/50 when looking long term. If investor has strong convictions for holding a fixed allocation, this fund is not for them anyway.

For me, I do find the global approach to be the ultimate implementation of passive equity indexing by removing all emotions and bias. I feel confident that I can justifiably stick with this approach if the US surges to 80% of world cap or falls to 20% and everything in between.
I agree that Total World Stock is the ultimate passive index fund. You have everything at once, and you're not overweighting any market, sector, or factor. It's likely to be one of the best performing stock portfolios there is, and it's incredibly simple.

Not for everyone (and not for me), but there's a strong argument that it should be the default Boglehead stock holding.

Regarding the missing equities in Total World vs. splitting across US/International funds, it's probably going to be inconsequential. Vanguard is very good at sampling the indices to avoid tracking error. I'd bet that a portfolio of Total US plus Total International, held at cap-weight, will perform within a few basis points of Total World. And a few extra basis points of expense ratio is also effectively meaningless; otherwise, we'd all have switched over to Fidelity's zero-expense funds by now.

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pokebowl
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Re: Would you buy Total World index if it had Admiral Shares?

Post by pokebowl » Fri Apr 05, 2019 8:00 pm

JustinR wrote:
Thu Apr 04, 2019 8:22 pm
I'll be into it once they have the same number of stocks and expense ratios as the separate funds. Simple as that.
Which funds out of curiosity? I mention that, because all the total market type funds Vanguard holds also contain inferior stock allocations then if you just held each of their components separately. Example holding international developed (VEA) and emerging (VWO) at the same weights of VXUS have a combined ER of 0.08% versus 0.09% for VXUS or 0.11% for the MF version and over 2k more stocks. Even breaking down further into Europe/Asia Vanguard funds add an additional 2-3k in stocks versus just holding the total market. :beer Though complexity also increases with the addition of each fund. I haven't done the portfolio visualizer of each types of break downs, but I assume the difference in two to three thousand stocks doesn't move the needle much versus the total market sample sizes and indexes. At that point it comes down to ER and tax situation if holding in taxable accounts.
Nullius in verba.

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