Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

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Oak&Elm
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Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Oak&Elm » Thu Sep 20, 2018 1:39 pm

I have some extra cash ($45k) in my Vanguard MM account and was planning to buy VWIUX (vanguard intermediate tax exempt muni bond fund) as soon as the balance hit $50k. Thinking hard about making the buy today with the fund at a 2 year low and looks like it may close even lower at the close. Obviously I would have to buy investors shares VWITX but that would just convert to Admiral shares when I add additional funds to get to $50k. I know this is market timing but I was planning on this within another few weeks anyhow. Anyone else in a similar situation?

Greg in Idaho
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Re: Buying VWIUX Today

Post by Greg in Idaho » Thu Sep 20, 2018 1:49 pm

I have a chunk left to DCA/buy dips - into bonds. Bought the low in May, and am watching closely as sale prices return...but I am in no rush

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Re: Buying VWIUX Today

Post by leonidas » Thu Sep 20, 2018 1:51 pm

I’ve been moving some of my spare cash to the admiral version of the fund. I own in Wells Fargo as part of the PMA package. There is no minimum.

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Re: Buying VWIUX Today

Post by aristotelian » Thu Sep 20, 2018 1:54 pm

I moved to ST Treasury a few months ago in my HSA. I will be waiting a bit longer before moving back into Intermediate. Just seems like interest rates still have room to run higher.

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Re: Buying VWIUX Today

Post by livesoft » Thu Sep 20, 2018 2:43 pm

For more market timing fun please note that the FOMC will meet next week and raise the FFR. Everybody knows that, but what they don't know is which adjectives and adverbs will change in the FOMC summary statement released on Wednesday.
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Re: Buying VWIUX Today

Post by Dale_G » Thu Sep 20, 2018 5:57 pm

You may as well buy VWITX investor class shares at your earliest convenience. The er for VWITX is .19%/yr and Admiral class VWIUX is .09%/yr. The sec yield is VWITX is 2.54%.

Neglecting any changes in NAV, you should earn $43.96 (that is after expenses) in interest in the next two weeks. The er difference between VWITX and VWIUX amounts of about $1.73 over the next 2 weeks for an investment of $45,000.

There is no reason to wait unless you are market timing.

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Greg in Idaho
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Re: Buying VWIUX Today

Post by Greg in Idaho » Thu Sep 20, 2018 6:08 pm

livesoft wrote:
Thu Sep 20, 2018 2:43 pm
For more market timing fun please note that the FOMC will meet next week and raise the FFR. Everybody knows that, but what they don't know is which adjectives and adverbs will change in the FOMC summary statement released on Wednesday.
Perhaps a game of BINGO is in order, using a selection of potential/likely adjectives and adverbs...

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Re: Buying VWIUX Today

Post by danielzliu » Thu Sep 20, 2018 8:18 pm

I did the same thing this week and finally converted to Admiral shares of VWUIX. On a related note, I read a thread on another forum that long term bonds VWLUX may be a better choice in taxable account, due to slightly higher return (SEC yield about 0.5% higher) and only 2 years longer duration in terms of interest rate sensitivity. With the buy and hold strategy over a 30-60 year investment period, does this make more sense? Thanks in advance.

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Re: Buying VWIUX Today

Post by UpperNwGuy » Thu Sep 20, 2018 9:29 pm

danielzliu wrote:
Thu Sep 20, 2018 8:18 pm
I did the same thing this week and finally converted to Admiral shares of VWUIX. On a related note, I read a thread on another forum that long term bonds VWLUX may be a better choice in taxable account, due to slightly higher return (SEC yield about 0.5% higher) and only 2 years longer duration in terms of interest rate sensitivity. With the buy and hold strategy over a 30-60 year investment period, does this make more sense? Thanks in advance.
I have this same question.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Dale_G » Thu Sep 20, 2018 10:18 pm

Most of my muni money is in VWLUX - the long term muni fund. And I doubt that I have an investment horizon anywhere near 30 years.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by daveydoo » Thu Sep 20, 2018 11:36 pm

Oak&Elm wrote:
Thu Sep 20, 2018 1:39 pm
I have some extra cash ($45k) in my Vanguard MM account and was planning to buy VWIUX (vanguard intermediate tax exempt muni bond fund) as soon as the balance hit $50k.
Hey, I'm just about to sell -- PM me! I'll give you a sweet deal! :D

I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Oak&Elm » Fri Sep 21, 2018 6:37 am

As for the long term muni bond fund VWLUX... I would actually prefer the extra dividend yield over VWIUX, the extra volatility actually doesn't worry me either since it would provide a TLH opportunity. I just read this forum a lot and it appears all the smart people recommend the intermediate term bond funds so I tend to rely on their wisdom and not go with my gut feeling. Over the years those "gut" feelings have rarely worked out. I'm having flashbacks of a couple big losers (GE and VALE). As for the difference between the long and intermediate bond funds I'm not sure which ever one I choose will make a significant impact on the overall portfolio. Thanks to everyone for their responses.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by dratkinson » Fri Sep 21, 2018 7:18 am

Fun fact. If you are interested in VWLTX, it provides bonus dividends when compared to VWITX.

Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.

I believe VWLTX's current bonus dividends boost its return by ~20% over what you would normally expect from VWLTX vs VWITX. Check current prices to wag this for yourself.
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by am » Fri Sep 21, 2018 7:34 am

dratkinson wrote:
Fri Sep 21, 2018 7:18 am
Fun fact. If you are interested in VWLTX, it provides bonus dividends when compared to VWITX.

Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.

I believe VWLTX's current bonus dividends boost its return by ~20% over what you would normally expect from VWLTX vs VWITX. Check current prices to wag this for yourself.
Thanks. Does everyone here agree with this? Looking to tax loss harvest from the inter. Muni fund.

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Re: Buying VWIUX Today

Post by am » Fri Sep 21, 2018 7:36 am

danielzliu wrote:
Thu Sep 20, 2018 8:18 pm
I did the same thing this week and finally converted to Admiral shares of VWUIX. On a related note, I read a thread on another forum that long term bonds VWLUX may be a better choice in taxable account, due to slightly higher return (SEC yield about 0.5% higher) and only 2 years longer duration in terms of interest rate sensitivity. With the buy and hold strategy over a 30-60 year investment period, does this make more sense? Thanks in advance.
I vaguely remember that there is more risk to the long term muni fund than just slightly longer duration although I don’t remember specifics. It was discussed on BH a while back but I couldn’t follow most of it. Anyone know?

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by SquawkIdent » Fri Sep 21, 2018 7:58 am

am wrote:
Fri Sep 21, 2018 7:34 am
dratkinson wrote:
Fri Sep 21, 2018 7:18 am
Fun fact. If you are interested in VWLTX, it provides bonus dividends when compared to VWITX.

Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.

I believe VWLTX's current bonus dividends boost its return by ~20% over what you would normally expect from VWLTX vs VWITX. Check current prices to wag this for yourself.
Thanks. Does everyone here agree with this? Looking to tax loss harvest from the inter. Muni fund.
I'm not sure of the exact numbers but yes you do get a higher dividend payout with VWLTX because its dividend yield is higher. Why is it higher? Because it's a riskier fund then VWITX. And VWALX pays even higher than VWLTX. Again, it's riskier. Is that a risk worth taking? Only you know that answer. Consider everything when making that decision. Good luck.

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Re: Buying VWIUX Today

Post by JackoC » Fri Sep 21, 2018 9:17 am

danielzliu wrote:
Thu Sep 20, 2018 8:18 pm
I did the same thing this week and finally converted to Admiral shares of VWUIX. On a related note, I read a thread on another forum that long term bonds VWLUX may be a better choice in taxable account, due to slightly higher return (SEC yield about 0.5% higher) and only 2 years longer duration in terms of interest rate sensitivity. With the buy and hold strategy over a 30-60 year investment period, does this make more sense? Thanks in advance.
Taking a snapshot just now VWLUX SEC yield is 2.95%, VWIUX 2.60%. The duration is 6.9 and 5.2 respectively, but note that the average final maturity is 16.9 and 8.9 respectively. What this tells you is that the longer term fund is more dominated by long term callable bonds where the call options are now 'in the money', IOW the bonds would be called with rates where they are now. If rates go up a lot VWLUX's duration will probably increase significantly relative to VWIUX's as more of those bonds are not called. Another way to say that is that VWLUX apparently has a less favorable convexity than VWIUX, just looking at the relative duration and maturity.

Some mutual fund providers give you a measure of this difference for fixed income funds, called the 'option adjusted spread', though usually for taxable funds. It's the yield spread over treasuries (which nowadays are all non callable) correcting for the value of the issuers' options to call bonds in the fund (which again results in lower maturity when rates are low, higher maturity when rates are high). Vanguard does not. I guess they view the presentation of such a 'black box' number, it must come from options models that can't explained in a few sentences, as not really adding to overall transparency. That might be reasonable, but the VWIUX v VWLUX comparison highlights this issue. It's reasonable to assume the investor is getting something like a fair value yield bump for granting more call options in VWLUX, but it's not really 35bps more net yield, it's 35 minus the unknown difference in call option value, all else equal.

Besides which the credit rating spectrum of VWIUX is slightly higher, if you compare the tables on Vanguard's site, and the duration obviously is a little lower even at current rates.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by House Blend » Fri Sep 21, 2018 9:24 am

dratkinson wrote:
Fri Sep 21, 2018 7:18 am
Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.
This is nonsense.

Comparing prices between two mutual funds is absolutely meaningless. Any "bonus" dividends that VWLTX is producing over VWITX would still be there, and in the same magnitude, if the share price was 10 times larger than VWITX, or 10 times smaller.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by House Blend » Fri Sep 21, 2018 9:28 am

daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")

FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate. Afterwards, for entertainment, I decided to chart this mix against VWIUX over on portfoliovisualizer and was surprised how closely they have tracked each other.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by UpperNwGuy » Fri Sep 21, 2018 9:44 am

House Blend wrote:
Fri Sep 21, 2018 9:28 am
daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")

FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate. Afterwards, for entertainment, I decided to chart this mix against VWIUX over on portfoliovisualizer and was surprised how closely they have tracked each other.
How did you determine that 2:1 was the right mix?

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by House Blend » Fri Sep 21, 2018 9:50 am

UpperNwGuy wrote:
Fri Sep 21, 2018 9:44 am
House Blend wrote:
Fri Sep 21, 2018 9:28 am
daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")

FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate. Afterwards, for entertainment, I decided to chart this mix against VWIUX over on portfoliovisualizer and was surprised how closely they have tracked each other.
How did you determine that 2:1 was the right mix?
I looked at the SEC yields, and the average durations, and looked for a ratio involving small integers that would get me close to VWIUX in both dimensions. 2:1 was the first thing I tried, and it looked good enough. YMMV.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by UpperNwGuy » Fri Sep 21, 2018 10:03 am

House Blend wrote:
Fri Sep 21, 2018 9:50 am
UpperNwGuy wrote:
Fri Sep 21, 2018 9:44 am
House Blend wrote:
Fri Sep 21, 2018 9:28 am
daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")

FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate. Afterwards, for entertainment, I decided to chart this mix against VWIUX over on portfoliovisualizer and was surprised how closely they have tracked each other.
How did you determine that 2:1 was the right mix?
I looked at the SEC yields, and the average durations, and looked for a ratio involving small integers that would get me close to VWIUX in both dimensions. 2:1 was the first thing I tried, and it looked good enough. YMMV.
That would imply — and I'm thinking out loud here — that if a person wanted to hold more of the municipal bond market than just Intermediate Term, they could augment their holdings by adding Long Term and Limited Term in a 2:1 ratio.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by watchnerd » Fri Sep 21, 2018 10:05 am

dratkinson wrote:
Fri Sep 21, 2018 7:18 am
Fun fact. If you are interested in VWLTX, it provides bonus dividends when compared to VWITX.

Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.

I believe VWLTX's current bonus dividends boost its return by ~20% over what you would normally expect from VWLTX vs VWITX. Check current prices to wag this for yourself.
This is a serious misunderstanding.

There is no bonus dividend, let alone 20% worth.

The relative NAV price difference is meaningless. The yield is on the dollar value of the investment; price per share doesn't matter.
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Oak&Elm » Fri Sep 21, 2018 10:40 am

Maybe this is where the 20% bonus is perceived:
A $50,000 minimum investment gets you.

VWIUX / current price 13.77 = 3631 shares x last distribution .033 = $120/month
VWLUX / current price 11.27 = 4436 shares x last distribution .033 = $146/month
$120 is 82% of $146 thus the approximate 20% bonus

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by SquawkIdent » Fri Sep 21, 2018 10:51 am

Oak&Elm wrote:
Fri Sep 21, 2018 10:40 am
Maybe this is where the 20% bonus is perceived:
A $50,000 minimum investment gets you.

VWIUX / current price 13.77 = 3631 shares x last distribution .033 = $120/month
VWLUX / current price 11.27 = 4436 shares x last distribution .033 = $146/month
$120 is 82% of $146 thus the approximate 20% bonus
Why do you get the "bonus" dividend? Answer...because it's riskier.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Oak&Elm » Fri Sep 21, 2018 11:22 am

Let's just replace the word "bonus" with "additional yield". Pretty sure everyone understands the longer the term of the bond the higher the risk and the higher the yield.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by daveydoo » Fri Sep 21, 2018 11:32 am

House Blend wrote:
Fri Sep 21, 2018 9:28 am
daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")
Thank you! That's a way more sophisticated level of understanding than I have -- or am likely to ever have. :D

If you're following along at home, I see this in the Wiki:

If you sell shares of a mutual fund at a loss, and those shares have been held for 6 months or less, then there are special rules that may alter the loss you claim. First, if those shares produced any tax-exempt interest, then the loss is reduced, dollar for dollar, by that interest. Second, if those shares were held while the fund distributed (long term) capital gains, then the loss is treated as a long term loss up to the dollar amount of the distribution those shares produced.[1][2] Note that most Vanguard Tax Exempt funds (and others like them) are not subject to the preceding 6 month rule because of the way they accrue and pay out interest (dividends). The 6 month rule for tax exempt interest comes from 26 U.S. Code § 852(b)(4)(B), but there is an exception in 852(b)(4)(E) for funds that declare dividends daily and pay them monthly or more frequently.[3] [4]

However, ETFs and the Tax-Exempt Bond Index Fund (which is the mutual fund class of an ETF) are subject to the six-month rule, because they declare dividends monthly, not daily. To see whether a fund is exempt from the six-month rule, check its prospectus for the statement, "dividends are declared daily and paid monthly"; if it says "dividends are declared monthly" (or quarterly), the six-month rule applies.


Adequately explained but conceptually too confusing for me. At the level at which I play (i.e., not high), I doubt anyone will come after me for this. And I doubt that the gain/loss wash-sale algorithms that the custodians use to generate their reports will flag this. I generally toggle off interest/dividend reinvestment after I TLH -- I know that will not fix this specific issue. Worst case: I guess I'd be on the hook for a few days of interest before it's all swept into a monthly payout. At present interest rates, that's not a lot.

Anyone ever gotten burned by this when TLH'ing a tax-exempt fund or ETF?
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Fri Sep 21, 2018 12:18 pm

daveydoo,

I've harvested from Vang. Intermed Muni...VWIUX to other Vang. Munis...no penalty.
I recently started to TLH from VWIUX to MUB; I heard that there could be a tax penalty; I did not research how big a deal it was. I changed horses to Vang Limited Term. viewtopic.php?p=4116624#p4116624

Recent discussion on Tax Loss Harvesting with Munis: viewtopic.php?f=1&t=258828

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by daveydoo » Fri Sep 21, 2018 12:28 pm

hudson wrote:
Fri Sep 21, 2018 12:18 pm

I recently started to TLH from VWIUX to MUB; I heard that there could be a tax penalty; I did not research how big a deal it was. I changed horses to Vang Limited Term. viewtopic.php?p=4116624#p4116624

Recent discussion on Tax Loss Harvesting with Munis: viewtopic.php?f=1&t=258828
Thank you! How did I miss that thread??

Still not sure if it's worth worrying about since neither I nor my accountant will be calculating the daily interest and I can barely count on my gain-loss reports to show the correct basis on the easy stuff.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Fri Sep 21, 2018 12:40 pm

daveydoo wrote:
Fri Sep 21, 2018 12:28 pm

Still not sure if it's worth worrying about since neither I nor my accountant will be calculating the daily interest and I can barely count on my gain-loss reports to show the correct basis on the easy stuff.
I can't explain why ETFs are a problem when say TL Harvesting from VWIUX to MUB. I just know that this forum's advice seems to be against it.
I couldn't find any advice showing that VWIUX To MUB was a good idea....so I changed MUB to Vanguard Limited-Term Tax-Exempt Fund Admiral Shares...VMLUX. VMLUX seems to be the consensus choice when TL Harvesting from VWIUX.

We could be wrong...but it could only be for 30 days.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by dratkinson » Fri Sep 21, 2018 6:46 pm

House Blend wrote:
Fri Sep 21, 2018 9:24 am
dratkinson wrote:
Fri Sep 21, 2018 7:18 am
Bonus dividends. As VWLTX has a lower price than VWITX, you'll buy more shares for the same purchase. Meaning, you'll earn bonus dividends from the additional shares purchased.
This is nonsense.

Comparing prices between two mutual funds is absolutely meaningless. Any "bonus" dividends that VWLTX is producing over VWITX would still be there, and in the same magnitude, if the share price was 10 times larger than VWITX, or 10 times smaller.

watchnerd wrote:
Fri Sep 21, 2018 10:05 am

This is a serious misunderstanding.

There is no bonus dividend, let alone 20% worth.

The relative NAV price difference is meaningless. The yield is on the dollar value of the investment; price per share doesn't matter. (Emphasis mine.)

Was certain I was correct so went to review SEC yield calculation.

Found "SEC Yield": https://www.investopedia.com/terms/s/secyield.asp

I was wrong. There are no bonus dividends. And this is why.

Calculation of the SEC Yield

Most funds calculate a 30-day SEC yield on the last day of each month, though U.S. money market funds calculate and report a seven-day SEC yield. The standardized formula for the 30-day SEC yield consists of four variables:

a = interest and dividends received over the last 30-day period

b = accrued expenses over the last 30-day period, excluding reimbursements

c = the average number of shares outstanding, on a daily basis, which were entitled to receive distributions

d = the maximum price per share on the day of the calculation, the last day of the period

The formula of the annualized 30-day SEC yield is:

2 x (((a - b) / (c x d) + 1) ^ 6 - 1)

As an example, assume Investment Fund X earned $12,500 in dividends and $3,000 in interest. The fund also recorded $6,000 worth of expense, of which $2,000 was reimbursed. The fund has 150,000 shares entitled to receive distributions, and on the last day of the period, the day the yield is being calculated, the highest price the shares reached was $75. In this scenario, the variables equal:

a = $12,500 + $,3000 = $15,500

b = $6,000 - $2,000 = $4,000

c = 150,000

d = $75

Once these numbers are plugged into the formula, it looks like this:

30-day yield = 2 x ((($15,500 - $4,000) / (150,000 x $75) + 1) ^ 6 - 1), or 2 x (0.00615) = 1.23%

The short answer. Since SEC Yield calculation...
--Includes the number of shares outstanding, then there can be no bonus shares. No bonus shares = no bonus dividends.
--Includes the (highest) share price (for the period), then SEC Yield is based on per-dollar paid.

watchnerd is correct. SEC Yield is based on dollars, not shares.

Sorry for the confusion.



Will leave my mistake to be a teachable moment.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by xpy1999 » Fri Sep 21, 2018 9:01 pm

I am thinking about next year when the rate stabilizes a bit before a long time (5 year) commitment.

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BoglePaul
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by BoglePaul » Sat Sep 22, 2018 10:46 am

House Blend wrote:
Fri Sep 21, 2018 9:28 am
daveydoo wrote:
Thu Sep 20, 2018 11:36 pm
I need to TLH since I'm down over 1% and was just deciding tonight whether the time was right. Was going to swap into MUB (iShares IM Term Muni ETF; ER 0.07). Slightly higher credit quality (AA instead of A) and slightly longer duration (6.0 instead of 5.1 years) but they have tracked pretty closely.
It will be harder to do a round trip back to VWIUX from MUB and claim a loss, if that's what you are hoping to do. See: https://www.bogleheads.org/wiki/Tax_los ... Regulatory
(Especially look for the phrase "However, ETFs and...")

FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate. Afterwards, for entertainment, I decided to chart this mix against VWIUX over on portfoliovisualizer and was surprised how closely they have tracked each other.
Thanks for the link, this was informative.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Sat Sep 22, 2018 11:40 am

House Blend wrote:
Fri Sep 21, 2018 9:28 am
FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate.
Good idea! I also harvested...all to Lim. Term Tax Exempt. Maybe next time...

House Blend...there have been losses since Tuesday in Limited Term and Long Term.
Would you have to wait 31 days to harvest those losses?
Any other thoughts on the recent losses?

am
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by am » Sat Sep 22, 2018 12:55 pm

hudson wrote:
Sat Sep 22, 2018 11:40 am
House Blend wrote:
Fri Sep 21, 2018 9:28 am
FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate.
Good idea! I also harvested...all to Lim. Term Tax Exempt. Maybe next time...

House Blend...there have been losses since Tuesday in Limited Term and Long Term.
Would you have to wait 31 days to harvest those losses?
Any other thoughts on the recent losses?
Ltd term versus 2:1 Long and Ltd term for tax loss purposes for 31 days doesn’t matter given average volatility of these bond funds, I think I’m going to use Ltd term on Monday mostly for simplicity.

Mr. Jelly
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Mr. Jelly » Sat Sep 22, 2018 7:15 pm

I have been in VWIUX for seven years now as I am retired. I take the distributions in cash every month.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Taylor Larimore » Sat Sep 22, 2018 7:51 pm

Oak&Elm wrote:
Thu Sep 20, 2018 1:39 pm
I have some extra cash ($45k) in my Vanguard MM account and was planning to buy VWIUX (vanguard intermediate tax exempt muni bond fund) as soon as the balance hit $50k. Thinking hard about making the buy today with the fund at a 2 year low and looks like it may close even lower at the close. Obviously I would have to buy investors shares VWITX but that would just convert to Admiral shares when I add additional funds to get to $50k. I know this is market timing but I was planning on this within another few weeks anyhow. Anyone else in a similar situation?
Oak&Elm:

Vanguard Intermediate-Term Tax-Exempt Bond Fund is an excellent fund in a taxable account for investors in a high tax-bracket.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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House Blend
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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by House Blend » Sun Sep 23, 2018 7:28 am

hudson wrote:
Sat Sep 22, 2018 11:40 am
House Blend wrote:
Fri Sep 21, 2018 9:28 am
FWIW, I harvested losses from VWIUX on Tuesday this week. I exchanged it for a 2:1 mix of Long Term and Limited Term Tax Exempt. This ratio approximates both the current yield and duration of Intermediate.
Good idea! I also harvested...all to Lim. Term Tax Exempt. Maybe next time...

House Blend...there have been losses since Tuesday in Limited Term and Long Term.
Would you have to wait 31 days to harvest those losses?
No, but you would have to sell for cash or exchange to some fund other than VWIUX.
Any other thoughts on the recent losses?
I have no need to harvest a couple of cents per share, but will look again on 10/19 (after the wash sale window expires for my 9/18 sale) and will likely go back to VWIUX then, even if it is a small gain. Yes, that would eat into the original harvested loss.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Sun Sep 23, 2018 8:19 am

Thanks House Blend! That's just what I needed to know.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by ps56k » Sat Oct 20, 2018 4:25 pm

Taylor Larimore wrote:
Sat Sep 22, 2018 7:51 pm
Vanguard Intermediate-Term Tax-Exempt Bond Fund is an excellent fund in a taxable account for investors in a high tax-bracket.
I have both VWIUX (tax exempt) and the usual VBTLX (tot bond) in my taxable account for some equity ballast.
With rates up, it looks more like a wash between the tax exempt vs the total bond - as far as net yields between the two for higher tax brackets.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Taylor Larimore » Sat Oct 20, 2018 5:12 pm

ps56k wrote:
Sat Oct 20, 2018 4:25 pm

I have both VWIUX (tax exempt) and the usual VBTLX (tot bond) in my taxable account for some equity ballast.
With rates up, it looks more like a wash between the tax exempt vs the total bond - as far as net yields between the two for higher tax brackets.
ps56k:

Bonds are for safety. Be very careful about looking only at "yield." This is because "higher yield" nearly always means "higher risk."
More money has been lost by investors seeking "higher yield" than has been lost at the point of a gun. -- Raymond DeVoe
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by UpperNwGuy » Sat Oct 20, 2018 7:15 pm

ps56k wrote:
Sat Oct 20, 2018 4:25 pm
Taylor Larimore wrote:
Sat Sep 22, 2018 7:51 pm
Vanguard Intermediate-Term Tax-Exempt Bond Fund is an excellent fund in a taxable account for investors in a high tax-bracket.
I have both VWIUX (tax exempt) and the usual VBTLX (tot bond) in my taxable account for some equity ballast.
With rates up, it looks more like a wash between the tax exempt vs the total bond - as far as net yields between the two for higher tax brackets.
These are my two bond funds, too. I began the year with equal amounts of each. Tax Exempt seems to be slightly ahead of Total Bond so far this year — And that’s before taxes!

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by ps56k » Sat Oct 20, 2018 7:22 pm

Taylor Larimore wrote:
Sat Oct 20, 2018 5:12 pm
Bonds are for safety. Be very careful about looking only at "yield." This is because "higher yield" nearly always means "higher risk."
More money has been lost by investors seeking "higher yield" than has been lost at the point of a gun. -- Raymond DeVoe
Yes - I only really have those 2 bond funds - and a normal MM acct at ALLY.
Also "had" some Vanguard International and EM bond funds - but exchanged those into my safety nets of Vanguard Muni and Tot Bond ...
Nothing else... looking to preserve my portfolio at this point.... not gamble it -

Here are some numbers for my various cash accounts - actual calc from monthly divs -

ALLY MM -------------- 0.98%
Vanguard MM --------- 0.82%
Vanguard Muni -------- 2.1%
Schwab Sweep -------- 0.32%
Chase checking ------- 0.01%

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by ps56k » Wed Oct 24, 2018 2:19 pm

How do you gauge your fixed assets or cash assets and their returns compared to say..... the 10-year
with the 10-year showing .... about 3 %

Ignoring the SEC yield listing - and looking at actual monthly returns...
Do you stay with these widespread types of holdings,
or migrate to purely the US Treas holdings ?

ALLY MM -------------- 0.98%
Vanguard MM --------- 0.82%
Vanguard Muni -------- 2.1%
Schwab Sweep -------- 0.32%
Chase checking ------- 0.01%

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Wed Oct 24, 2018 2:28 pm

ps56k wrote:
Wed Oct 24, 2018 2:19 pm
How do you gauge your fixed assets or cash assets and their returns compared to say..... the 10-year
with the 10-year showing .... about 3 %

Ignoring the SEC yield listing - and looking at actual monthly returns...
Do you stay with these widespread types of holdings,
or migrate to purely the US Treas holdings ?

ALLY MM -------------- 0.98%
Vanguard MM --------- 0.82%
Vanguard Muni -------- 2.1%
Schwab Sweep -------- 0.32%
Chase checking ------- 0.01%
For taxable, I go with VWIUX (TTM is 2.9%) and the highest CDs I can find. On CDs, I usually read KevinM's contributions before I buy.
I think that I can beat treasuries with CDs.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by ps56k » Wed Oct 24, 2018 2:35 pm

hudson wrote:
Wed Oct 24, 2018 2:28 pm
For taxable, I go with VWIUX (TTM is 2.9%) and the highest CDs I can find. On CDs, I usually read KevinM's contributions before I buy.
I think that I can beat treasuries with CDs.
I had a CD ladder going at ALLY ... but was concerned about the unwinding of QE - and the interest rate increases.
So... as each CD matured, instead of rolling over, I cashed out - and now have a lot of cash on the sideline.
Also - being pushed into high tax brackets due to some stock selling and Cap Gains,
I have been migrating to the MUNI fund - how to preserve capital + try to keep up with inflation + tax advantaged

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by Oak&Elm » Wed Oct 24, 2018 3:28 pm

Thank you Taylor, I feel honored whenever you comment on something I have posted, deep respect for you Sir.
Oak&Elm

Oak&Elm:

Vanguard Intermediate-Term Tax-Exempt Bond Fund is an excellent fund in a taxable account for investors in a high tax-bracket.

Best wishes.
Taylor

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by hudson » Wed Oct 24, 2018 4:05 pm

ps56k wrote:
Wed Oct 24, 2018 2:35 pm
hudson wrote:
Wed Oct 24, 2018 2:28 pm
For taxable, I go with VWIUX (TTM is 2.9%) and the highest CDs I can find. On CDs, I usually read KevinM's contributions before I buy.
I think that I can beat treasuries with CDs.
I had a CD ladder going at ALLY ... but was concerned about the unwinding of QE - and the interest rate increases.
So... as each CD matured, instead of rolling over, I cashed out - and now have a lot of cash on the sideline.
Also - being pushed into high tax brackets due to some stock selling and Cap Gains,
I have been migrating to the MUNI fund - how to preserve capital + try to keep up with inflation + tax advantaged
I may be the only one who disregards news of interest rate increases. I rarely keep much cash; I'll just drop it into VWIUX for taxable and take the current market rate. (Sometimes, I work too hard to keep my cash working.) Going into higher tax brackets is a pain; the Medicare IRMAA adjustment will make you think twice. For me, it's just been a high tax year and then it'll drop back down.

To preserve capital, reduce taxes, and keep up with inflation, it's VWIUX in taxable...at least that's where I'm heading. In tax advantaged, I use bank CDs, brokered CDs, and quality bond funds.

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Re: Buying VWIUX Today [Vanguard Intermediate-Term Tax-Exempt Muni Bond]

Post by ps56k » Wed Oct 24, 2018 5:58 pm

After today's Dow DROP of 600 - I may not have to address any future Asset Class rebalancing -

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