Why does FSGDX have such a low yield compared to VTIAX?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

Why does FSGDX have such a low yield compared to VTIAX??

Fidelity Spartan Glb ex USIdxAdvtg
FSGDX 1.43%
http://quotes.morningstar.com/fund/FSGDX/f?t=FSGDX


Vanguard Total Intl Stock Index Admiral
VTIAX 3.36%
http://quotes.morningstar.com/fund/VTIAX/f?t=VTIAX

The two funds are basically the same (Global ex USA), except VTIAX is all-caps and FSGDX is large-caps, but I don't see how that would explain the difference in yield.

[Editted to add fund names.]
Last edited by 555 on Sat Nov 01, 2014 1:16 pm, edited 1 time in total.
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

I own both of these funds. I would like you to do two things to investigate this issue please.

1. Plot "Growth of" at Morningstar for the 2 funds simuitaneously. Is there a ~2% difference? It would be very obvious.

2. List the ACTUAL distributions of these two funds in this thread for the past 2 years. Be aware that capital gains is not the same as dividends even though both are considered distributions.
Wiki This signature message sponsored by sscritic: Learn to fish.
placeholder
Posts: 8421
Joined: Tue Aug 06, 2013 12:43 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by placeholder »

Yield on stock funds is pretty meaningless and especially so in this case as the Vanguard fund distributes quarterly and the Fidelity yearly.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

livesoft wrote:1. Plot "Growth of" at Morningstar for the 2 funds simultaneously. Is there a ~2% difference? It would be very obvious.
Okay, I did that. From 09/08/2011 (perhaps when FSGDX started(?)) to 11/01/2014 $10k grows to:
FSGDX $12,753.18
VTIAX $12,991.40
which actually is a non-trivial difference, so I do wonder why that is. It is a ~2% difference over about 3 years. Is that what you meant? Or were you expecting the absence of a ~2% difference per year despite yield difference?
livesoft wrote:2. List the ACTUAL distributions of these two funds in this thread for the past 2 years. Be aware that capital gains is not the same as dividends even though both are considered distributions.
https://fundresearch.fidelity.com/mutua ... /316146141
https://personal.vanguard.com/us/funds/ ... =INT#tab=4

That confirms the percentages (and I see FSGDX has a CGD). This is a tax-sheltered account where I can get FSGDX?

I'm still quite puzzled about the difference in yield, and now I'm puzzled about other things too.

Can anyone figure this out?
User avatar
jpsfranks
Posts: 1039
Joined: Sun Aug 26, 2007 11:45 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by jpsfranks »

I believe FSGDX has no small caps, and I think international small caps have outperformed large caps over your charted period.
User avatar
House Blend
Posts: 4878
Joined: Fri May 04, 2007 1:02 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by House Blend »

If you are worried about small caps, compare with VFWAX. Not the exact same index as FSGDX, but closer to it than VTIAX. The start date on this fund is 9/27/2011, so we'll begin from there.

Morningstar gives me these numbers for 9/27/2011 to 11/01/2014:
FSGDX $13983.75
VTIAX $14171.35
VFWAX $14194.05

Gaps of 1.34% and 1.50% (not annualized) over 3+ years.

Before getting too overworked about these gaps, I would compare the returns of the respective benchmarks, and the tracking errors of each fund over this period. On top of that, there could be more differences arising from fair value pricing issues. ERs are about the same.

This wiki page illustrates just how much variability there is among benchmarks that are all supposedly tracking the same asset class: global ex-US stocks:
http://www.bogleheads.org/wiki/Global_e ... ex_returns

But more interesting to me is the puzzle presented by the gap in dividends. Even if you add in the cap gain distributions, there is still a gap.

Income returns in 2012 and 2013 for VFWAX were 3.52% and 3.28%, VTIAX is similar. Eyeballing the Fidelity fund, looks like about 1.5% and 1.75%, gaps of 2% and 1.5% each year. I can't explain that.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

jpsfranks wrote:I believe FSGDX has no small caps, and I think international small caps have outperformed large caps over your charted period.
It's true that FSGDX has no small caps. But when I add Vanguard FTSE All-World ex-US Small-Cap Index Fund Investor Shares (VFSVX) to this comparison:
555 wrote:
livesoft wrote:1. Plot "Growth of" at Morningstar for the 2 funds simultaneously. Is there a ~2% difference? It would be very obvious.
Okay, I did that. From 09/08/2011 (perhaps when FSGDX started(?)) to 11/01/2014 $10k grows to:
FSGDX $12,753.18
VTIAX $12,991.40
which actually is a non-trivial difference, so I do wonder why that is. It is a ~2% difference over about 3 years. Is that what you meant? Or were you expecting the absence of a ~2% difference per year despite yield difference?


I get
FSGDX $12,753.18
VTIAX $12,991.40
VFSVX $12,411.92

So that doesn't explain it. The difference is the wrong way. It's a puzzle.

I newly have access to Fidelity mutual funds (instead of TIAA-CREF) in my 403b, and was thinking of using this fund FSGDX, but I need to figure if it has a defect, or if there is a meaningless glitch in the numbers.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

House Blend wrote:If you are worried about small caps...

This wiki page illustrates just how much variability there is among benchmarks that are all supposedly tracking the same asset class: global ex-US stocks:
http://www.bogleheads.org/wiki/Global_e ... ex_returns
I just saw this, and thanks for the further analyses. I'm definitely not "worried" about small caps, and I would much prefer "total" funds. I just want to cobble together a 3-fund portfolio the best I can from the available funds in various location. I have just gained access to Fidelity spartan funds (but not Vanguard) in my 403b space, so I want to check out these funds. FSGDX is the closest thing they have to a TISM fund.

Thanks for the wiki link about the various international stock indexes. So it could be FSGDX are just a bit different VTIAX (in more ways than just small caps), and won't track tha closely.

I just want to make sure that FSGDX is not a dud, and should perform similarly to VTIAX (V TISM) in the long term.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

Anyone have any ideas about this. There are unanswered questions about these funds.
livesoft wrote:I own both of these funds. I would like you to do two things to investigate this issue please.

1. Plot "Growth of" at Morningstar for the 2 funds simuitaneously. Is there a ~2% difference? It would be very obvious.

2. List the ACTUAL distributions of these two funds in this thread for the past 2 years. Be aware that capital gains is not the same as dividends even though both are considered distributions.
I'm fine with your Socratic methods, but do you actually know the answer?
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

No, I don't know the answer and your investigation of the questions didn't turn up anything. (I did not check your answers either, but took them at face value.) I thought House Blend's report was interesting.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
tainted-meat
Posts: 838
Joined: Tue Dec 20, 2011 8:35 pm
Location: Kentucky

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by tainted-meat »

I am bumping to see if anyone knows the answer to this. I'm curious as well.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

I found these
https://personal.vanguard.com/us/funds/ ... IntExt=INT
https://investor.vanguard.com/mutual-fu ... IntExt=EXT

So the indexes are different and may differ from each other by a few tens of basis points per year. Sometimes one index wins, sometimes the other.

The funds may also each differ from their respective index by a few tens of basis points per year. This is more than what could be explained by the expense ratios alone, and sometimes the fund beats the index.

So the funds should be similar but won't track super closely.

The difference in yield is still a mystery though.
Frank2012
Posts: 194
Joined: Fri Jan 25, 2013 6:16 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by Frank2012 »

Wow, I hadn't realized the difference! According to Morningstar, FSGDX has a yield of 1.53% vs. VTIAX which has a yield of 3.37%. I'm curious if anyone ever solved the answer to this question? Why such a difference in yield?
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

The 12/12/2014 distribution from FSGDX was about 2.5% all by itself. This was the only distribution so far for 2014.

The 2014 distributions of VTIAX amount to about 3.1%. If one looks at only the last 6 months, it is about 1.34% or 2.7% annuallized.

They are really close enough given that FSGDX appears not to have any of the small caps that VTIAX has.

This just says to be wary of Morningstar's extrapolation.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

The gap may have narrowed, but the anomaly is still larger than could be explained by relatively minor differences in index.
mathwhiz
Posts: 897
Joined: Tue Jul 01, 2008 7:58 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by mathwhiz »

My theory is that FSGDX is a relatively new fund created 9/8/2011 that it has had a very large ramp up in assets over to $748 million from probably $25 million in seed money to start the fund. As more new money has come in, more shares had to be created, and all these new assets over the course of the year have diluted the dividend yield.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

mathwhiz wrote:My theory is that FSGDX is a relatively new fund created 9/8/2011 that it has had a very large ramp up in assets over to $748 million from probably $25 million in seed money to start the fund. As more new money has come in, more shares had to be created, and all these new assets over the course of the year have diluted the dividend yield.
That theory is definitely consistent with the data. Good one.
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

FSGDX will probably end up being more tax efficient than VEA/VTMGX and VXUS / VTIAX by a wide margin for the same return in 2014. Although I suppose the fund that lost the most money could be called the most tax efficient. :twisted:
Wiki This signature message sponsored by sscritic: Learn to fish.
mesaverde
Posts: 579
Joined: Wed May 02, 2007 4:14 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by mesaverde »

Fidelity All World Ex-U.S. index fund (FSGDX) pays dividends annualy in December.
Vanguard Total International Index (VTIAX) pays dividends quarterly.

Yes, the two funds track different indexes. But the fact that dividends are reinvested more frequently in the Vanguard fund gives the Vanguard fund an advantage.
"Learn from the past, live in the present, plan for the future"
User avatar
House Blend
Posts: 4878
Joined: Fri May 04, 2007 1:02 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by House Blend »

mesaverde wrote:But the fact that dividends are reinvested more frequently in the Vanguard fund gives the Vanguard fund an advantage.
No. In a mutual fund, dividends are reinvested continuously.

Dividend (and cap gain) distributions are simply bookkeeping formalisms that have no net effect on fund returns. Of course they do create immediate tax costs for the individual (taxable) investor, and if all else is equal, smaller total distributions would be better. But distribution frequency is mostly irrelevant for tax purposes. There can be minor effects related to the relative costs of buying a dividend, or avoiding one.
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

I think FSGDX has a lower yield and lower performance because Fidelity pays itself higher brokerage fees or higher prices for buys and lower prices for sales when it trades for this fund. These fees may not end up reflected in the fund expense ratio.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

livesoft wrote:I think FSGDX has a lower yield and lower performance because Fidelity pays itself higher brokerage fees or higher prices for buys and lower prices for sales when it trades for this fund. These fees may not end up reflected in the fund expense ratio.
Are you saying they're skimming off this fund? That should show up in the performance (eventually).
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by livesoft »

Check the performance yourself. What do you see?
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by 555 »

I see it trails its index by about 30bp per year.
etfftw
Posts: 1
Joined: Wed Feb 01, 2017 12:37 pm

Re: Why does FSGDX have such a low yield compared to VTIAX?

Post by etfftw »

I'm also interested in getting to the bottom of this. FSGDX is the only int'l index offered in my 401k and I'm worried that it's inferior to the similar Vanguard offerings. Doing a side by side comparison of the annual reports for FSGDX and VTIAX from last year, it appears that Fidelity withholds foreign taxes while Vanguard does not. Also, Vanguard makes 5x the percentage of AUM in security lending compared to Fidelity (.02% vs .1%). However, these discrepancies don't account for the entire difference in Net Investment Income. Fidelity's NII is 2.07% of AUM, Vanguard's is 2.70%.
Post Reply