TLH Partners: Benchmark vs. Underlying Index

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
mrspock
Posts: 1293
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

TLH Partners: Benchmark vs. Underlying Index

Post by mrspock »

When choosing TLH partners and one wishes to steer clear of IRS wash sale rules, should one ensure the substitute fund tracks a different underlying index or is benchmarked against a different index or both?

For example:
SCHB - Is benchmarked against the Russell 3000 Index, underlying index is Dow Jones US Broad Stock Market
SCHX - Is benchmarked against Russell 1000 Index, underlying index is Dow Jones US Total Stock Market Large-Cap
SCHK - Underlying index is Schwab 1000 Index, no benchmark provided (only 500M in assets, 400k vol.... liquidity concerns?)
VOO - Is benchmarked against S&P 500 TR, underlying index is S&P 500 Index
VTI - Is benchmarked against Russell 3000, underlying index is CRSP U.S. Total Market.

I'm trying to TLH VOO + VTI over to a 3rd fund and I'm a bit confused that the underlying index != benchmark for some ETFs. What's the safe TLH move here? For example, is VTI to SCHB too close of a swap? Or VTI to SCHX? VOO I'm a bit less worried about since the S&P 500 is pretty different from the others.

Bonus question: When TLH'ing large amounts ($500k+), are there any special concerns here? Are there risks if you are too much of the daily volume? For example for SCHK if you TLH'd 1M you'd be 10% of the daily volume, this seems like it could have distortive effects on the ETF pricing you might get.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: TLH Partners: Benchmark vs. Underlying Index

Post by PFInterest »

index
jacoavlu
Posts: 994
Joined: Sun Jan 06, 2013 12:06 pm

Re: TLH Partners: Benchmark vs. Underlying Index

Post by jacoavlu »

My opinion which is worth what it costs is that two funds that track a different index are not substantially identical
User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: TLH Partners: Benchmark vs. Underlying Index

Post by Earl Lemongrab »

Benchmark is irrelevant. Many if not most active mutual funds benchmark to an index.
columbia
Posts: 2928
Joined: Tue Aug 27, 2013 5:30 am

Re: TLH Partners: Benchmark vs. Underlying Index

Post by columbia »

Vanguard also offers a large cap fund, which can be used as a TLH partner.

Most people spend (far) more on coffee per year, than the expected (and actual) variance of returns between this fund, TSM and Vanguard 500.
Post Reply