Vanguard Total World Stock (VTWAX) and All-World ex-US Small Cap Admiral Shares (VFSAX) now available (February 7)

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Vanguard Total World Stock (VTWAX) and All-World ex-US Small Cap Admiral Shares (VFSAX) now available (February 7)

Post by jhfenton » Thu Jan 17, 2019 10:00 am

According to a new filing with the SEC today, Admiral Shares for Vanguard Total World Stock Index Fund and Vanguard FTSE All-World ex-US Small Cap Index Fund should launch February 5, 2019.

Vanguard original filed the draft prospectuses on November 19, 2018 with an effective date 60 days later, so some of us were hoping the funds would launch tomorrow. Vanguard's filing today delays the effective date until February 5, 2019.

According to the November filing, the expense ratio for Total World Admiral will be 0.10%, the same as the ETF, and the expense ratio for ex-US Small Cap will be 0.16%, compared to 0.13% for VSS in last year's prospectus and 0.12% in the current annual report.

There are still no tickers listed. Does anyone have any guesses for tickers?

Current tickers
VSS - ex-US Small Cap ETF
VFSVX - ex-US Small Cap Investor
VFSNX - ex-US Small Cap Institutional

VT - Total World ETF
VTWSX - Total World Investor
VTWIX - Total World Institutional

The obvious ticker for Total World Admiral is VTWAX. Nothing comes up on a Google search to indicate that it has been used before.

The obvious ticker for ex-US Small Cap is VFSAX, but until November 2016, that was used for Victory Select Fund Class A. They have reused dead tickers before. VEGBX (Vanguard Emerging Markets Bond Admiral Shares) belonged to Van Kampen Equity & Income Fund Class B until it was liquidated. VFSMX does not seem to be in use.
Last edited by jhfenton on Thu Feb 07, 2019 8:38 am, edited 2 times in total.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by mcraepat9 » Thu Jan 17, 2019 1:01 pm

Great news - though annoying to see the higher ER for the mutual fund version of VSS.
Amateur investors are not cool-headed logicians.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Vulcan » Thu Jan 17, 2019 1:06 pm

Hope they do not keep postponing it further.

Agree on VTWAX.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Thu Jan 17, 2019 1:22 pm

mcraepat9 wrote:
Thu Jan 17, 2019 1:01 pm
Great news - though annoying to see the higher ER for the mutual fund version of VSS.
I get the sense that Vanguard is abandoning the assumption that ETFs and Admiral Shares bear an equal proportion of the costs. I noticed in the latest annual report for Vanguard Emerging Markets that the prior year's expense ratio for VWO was reported as 0.12% compared to 0.14% for the Admiral Shares VEMAX. In last year's (02/22/18) prospectus, the ER was reported at 0.14% for both. I suspect that next month's prospectus will show cheaper ETF share classes.

I don't closely follow other funds, but I'm guessing that we are going to see more of this with the Investor Shares closing. Essentially, Admiral Shares are going to absorb some of the expenses from the Investor Shares because the ETF share classes are where the obvious price competition is taking place.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by saintsfan342000 » Thu Jan 17, 2019 1:24 pm

Great news. Are there any other Admiral shares out there with ERs that differ from the corresponding ETF? I wonder why this one is different, and whether it will come down to equal the ETF after a year or two when it reaches some sufficient level of assets.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by pascalwager » Thu Jan 17, 2019 2:04 pm

The reality of the nature of my five accounts is that I could/would probably only use TWS in my Roth, so I'll probably just stick with 50/50 US/int'l overall.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by asset_chaos » Thu Jan 17, 2019 2:34 pm

Pleasures delayed are pleasures enhanced---and all that. Still I'm puzzled. The footnotes in the last annual report for total world said that actual expenses for investor shares had been 18 bp instead of the 19 headline rate. If admiral shares will be 10 bp, there must be a lot more small investor shareholders than I thought. Maybe a lot of shareholders own via tax deferred plans, but I'm sure my puzzlement will be cleared up by the report after admiral shares are introduced.
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by mcraepat9 » Thu Jan 17, 2019 3:04 pm

jhfenton wrote:
Thu Jan 17, 2019 1:22 pm
mcraepat9 wrote:
Thu Jan 17, 2019 1:01 pm
Great news - though annoying to see the higher ER for the mutual fund version of VSS.
I get the sense that Vanguard is abandoning the assumption that ETFs and Admiral Shares bear an equal proportion of the costs. I noticed in the latest annual report for Vanguard Emerging Markets that the prior year's expense ratio for VWO was reported as 0.12% compared to 0.14% for the Admiral Shares VEMAX. In last year's (02/22/18) prospectus, the ER was reported at 0.14% for both. I suspect that next month's prospectus will show cheaper ETF share classes.

I don't closely follow other funds, but I'm guessing that we are going to see more of this with the Investor Shares closing. Essentially, Admiral Shares are going to absorb some of the expenses from the Investor Shares because the ETF share classes are where the obvious price competition is taking place.
I guess this is fundamentally right.
Amateur investors are not cool-headed logicians.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Dink2018 » Thu Jan 17, 2019 7:24 pm

Does anyone know if it will be as well diversified as holding the same components as the stock portions inside a life strategy fund. I think I remember looking at the VT etf and found it was something like a few thousand stocks short.

I like the idea of having a single fund for my stock portion I don't have to balance, but I don't want to have less diversity than what I'm already getting in the lifestyle funds.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Thu Jan 17, 2019 8:01 pm

Dink2018 wrote:
Thu Jan 17, 2019 7:24 pm
Does anyone know if it will be as well diversified as holding the same components as the stock portions inside a life strategy fund. I think I remember looking at the VT etf and found it was something like a few thousand stocks short.

I like the idea of having a single fund for my stock portion I don't have to balance, but I don't want to have less diversity than what I'm already getting in the lifestyle funds.
Total World Admiral will be another share class of the same fund as VT and the existing Investor Shares, so it will hold the same 7,996 stocks as those share classes. You are correct that 7,996 is somewhat fewer than the 9,758 in Vanguard Total Stock (3,503) and Vanguard Total International Stock (6,255) combined.

I'm actually not sure why the Total World has fewer stocks, but at that level I don't think you're losing much in diversification.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Cash » Thu Jan 17, 2019 8:28 pm

Thanks for the update! Interesting observation about the ER differences between the ETF and the admiral class.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by asset_chaos » Thu Jan 17, 2019 8:29 pm

Dink2018 wrote:
Thu Jan 17, 2019 7:24 pm
Does anyone know if it will be as well diversified as holding the same components as the stock portions inside a life strategy fund. I think I remember looking at the VT etf and found it was something like a few thousand stocks short.

I like the idea of having a single fund for my stock portion I don't have to balance, but I don't want to have less diversity than what I'm already getting in the lifestyle funds.
I don't know the specifics of total US and total international because I switched to total world about 10 years ago. (A silver lining of the financial crisis and stock market plunge.) But FTSE says the global all-cap index covers 98% of global market cap, so it's well diversified by any standard. The 31 Dec fact sheet for the index is here https://www.google.com/url?sa=t&rct=j&q ... 2fmYLyxB-y
Regards, | | Guy

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by sabtastic » Thu Jan 17, 2019 10:32 pm

wow, this is exciting.

Two things that have always bothered me about the existing VTWSX:

1. It is more expensive than holding VTIAX and VTSAX (not very much but hard to justify the move if I already own these in a 45/55 proportion)
2. It has fewer stocks than the above combo
3. Its performance over time is worse than the above combo (why!?)

The biggest advantages with the new changes:

1. Lower cost to entry (this admiral will be $3000 just like all the others I assume?)
2. No rebalancing, ever!
3. Really no need to sell until ready to rebalance into bonds late in life

If I was just starting out this would be the fund for me, especially for something like a roth.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by saintsfan342000 » Fri Jan 18, 2019 12:06 am

sabtastic wrote:
Thu Jan 17, 2019 10:32 pm
wow, this is exciting.

Two things that have always bothered me about the existing VTWSX:

1. It is more expensive than holding VTIAX and VTSAX (not very much but hard to justify the move if I already own these in a 45/55 proportion)
2. It has fewer stocks than the above combo
3. Its performance over time is worse than the above combo (why!?)
With regard to the third of your two things, I would guess it's because market cap between US and Int'l has changed over time, even within jsut the last few years. Of course now I can't find it now, but just recently I saw a breakdown and IIRC in past the proportion was reversed not so long ago. If I can locate I'll post.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Amadis_of_Gaul » Fri Jan 18, 2019 8:47 am

I'm excited about this! I've stayed away from the Total World Stock Index before now because those expense ratios were juuust enough higher to bother me. However, I will happily accept 10 basis points as my never-rebalance-equities tax.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Vulcan » Fri Jan 18, 2019 9:33 am

Amadis_of_Gaul wrote:
Fri Jan 18, 2019 8:47 am
I'm excited about this! I've stayed away from the Total World Stock Index before now because those expense ratios were juuust enough higher to bother me. However, I will happily accept 10 basis points as my never-rebalance-equities tax.
I switched from VTSAX/VTIAX to VT once its ER got to current levels, but did not like the additional logistical complexities of trading ETFs. Once the preliminary prospectus was filed, I sold and bought VTSMX (and arbitraged some gains in the process due to selling VT on a premium day). A little bummed about the delay, can't wait to convert to VTWAX(?) in, hopefully, just another couple of weeks.

Fidelity got nothing on this!

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by siamond » Fri Jan 18, 2019 9:55 am

Will be lovely to see it happening. My elder son invests in Total-World and I invest in Int'l Small.

The difference between ETF and MF/Admiral is puzzling. This is the same fund (cf. Vanguard's patent). Yes, investor shares are on their way out, but I thought this would be a great equalizer between all fund flavors, ETFs included. I don't get it.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by livesoft » Fri Jan 18, 2019 10:02 am

jhfenton wrote:
Thu Jan 17, 2019 10:00 am
According to a [url=https://www.sec.gov/Archives/edgar/data/8574There are still no tickers listed. Does anyone have any guesses for tickers?
I'll guess VFSWX for VSS/VFSVX
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Fri Jan 18, 2019 10:25 am

siamond wrote:
Fri Jan 18, 2019 9:55 am
Will be lovely to see it happening. My elder son invests in Total-World and I invest in Int'l Small.

The difference between ETF and MF/Admiral is puzzling. This is the same fund (cf. Vanguard's patent). Yes, investor shares are on their way out, but I thought this would be a great equalizer between all fund flavors, ETFs included. I don't get it.
It's just speculation on my part until we see all the new prospectuses roll out in 2019, but I'm guessing the opposite. I suspect that Admiral Shares will be asked to absorb a majority of the incremental expenses that used to be paid by Investor Shares. The allocation of expenses between share classes was always a bit arbitrary, including allocating equal expenses to ETFs and Admiral Shares.

I expect to see VWO at 12 bp and VEMAX at 14 bp when the new Emerging Markets prospectus comes out next month, and I suspect it won't be the last one with similar numbers.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by slow n steady » Fri Jan 18, 2019 10:45 am

pascalwager wrote:
Thu Jan 17, 2019 2:04 pm
The reality of the nature of my five accounts is that I could/would probably only use TWS in my Roth, so I'll probably just stick with 50/50 US/int'l overall.
Same story here. It sounds great in theory but not possible until retirement.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Vulcan » Fri Jan 18, 2019 10:51 am

slow n steady wrote:
Fri Jan 18, 2019 10:45 am
pascalwager wrote:
Thu Jan 17, 2019 2:04 pm
The reality of the nature of my five accounts is that I could/would probably only use TWS in my Roth, so I'll probably just stick with 50/50 US/int'l overall.
Same story here. It sounds great in theory but not possible until retirement.
Not necessarily.
Both me and my wife last changed jobs relatively recently, and all our previous retirement accounts are rolled over to Vanguard, where our Roth and Taxable also are.

Since current retirement accounts are mostly bonds, with a little bit of stocks in 50/50 US/Intl approximation, VTWSX represents the bulk of our stock portfolio.

But for those with majority of their portfolio locked in the current employer's retirement account this is admittedly a less urgent piece of news.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by rudeboy » Fri Jan 18, 2019 11:13 am

Great news! How can you not want to be in Total World? It just sounds cool 8-)

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by siamond » Fri Jan 18, 2019 1:18 pm

jhfenton wrote:
Fri Jan 18, 2019 10:25 am
It's just speculation on my part until we see all the new prospectuses roll out in 2019, but I'm guessing the opposite. I suspect that Admiral Shares will be asked to absorb a majority of the incremental expenses that used to be paid by Investor Shares.
Yes, you're right, for transition reasons, it would make sense. I was more thinking to the steady state later on, but they can always slowly equalize over time. I am glad that investors shares are going away, this was clearly unnecessary complexity.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by arf30 » Fri Jan 18, 2019 1:32 pm

Once this rolls out I'll be very interested to see who switches over from VTSAX/VTIAX despite the small ER and diversification differences. Would be great to have a single self balancing fund in taxable instead of two but I'm too far in the hole with capital gains.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by asset_chaos » Fri Jan 18, 2019 5:27 pm

arf30 wrote:
Fri Jan 18, 2019 1:32 pm
Once this rolls out I'll be very interested to see who switches over from VTSAX/VTIAX despite the small ER and diversification differences. Would be great to have a single self balancing fund in taxable instead of two but I'm too far in the hole with capital gains.
I don't think many would---or should---pay tax to switch. But don't despair, another 2008-2009 style stock market plunge could save the day.-) That's what happened to me. I had tax managed growth and income, tax managed international, and emerging market funds. When total world started, I knew that was more suitable for me, but didn't want to pay capital gains to consolidate into the simpler portfolio. But happy days were ahead. 50 and 60% drops in stock markets everywhere eliminated that pesky capital gains problem and allowed me to consolidate into total world both much sooner than I was expecting and without paying capital gains tax. Maybe you'll be just as lucky some day.-)
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Doc » Fri Jan 18, 2019 6:18 pm

asset_chaos wrote:
Fri Jan 18, 2019 5:27 pm
But happy days were ahead. 50 and 60% drops in stock markets everywhere eliminated that pesky capital gains problem and allowed me to consolidate into total world both much sooner than I was expecting and without paying capital gains tax. Maybe you'll be just as lucky some day.-)
Happy days? Capital gains are not pesky in my view. Capital losses however are pesky.

The more money you make the more taxes you pay. As long as the tax rate is less than 100% you are better off having gains. :P
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by asset_chaos » Fri Jan 18, 2019 7:00 pm

Doc wrote:
Fri Jan 18, 2019 6:18 pm
asset_chaos wrote:
Fri Jan 18, 2019 5:27 pm
But happy days were ahead. 50 and 60% drops in stock markets everywhere eliminated that pesky capital gains problem and allowed me to consolidate into total world both much sooner than I was expecting and without paying capital gains tax. Maybe you'll be just as lucky some day.-)
Happy days? Capital gains are not pesky in my view. Capital losses however are pesky.

The more money you make the more taxes you pay. As long as the tax rate is less than 100% you are better off having gains. :P
The tones of frivolity and satire are apparently hard to convey in writing---and I was not up to the task.
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by RhoRho » Fri Jan 18, 2019 7:22 pm

Am I missing something? How do we know the US/International ratio?

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by bluquark » Fri Jan 18, 2019 7:24 pm

RhoRho wrote:
Fri Jan 18, 2019 7:22 pm
Am I missing something? How do we know the US/International ratio?
It's market cap targeted instead of fixed % targeted. Just like how VTSAX weights large and small cap components. So it will drift every year as valuation changes and as more international stocks become investible. Currently it's around 55% US, 45% rest-of-world.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Fri Jan 18, 2019 7:26 pm

RhoRho wrote:
Fri Jan 18, 2019 7:22 pm
Am I missing something? How do we know the US/International ratio?
The ratio for Total World changes as the relative market cap changes. You can find the most recent breakdown on the fund's portfolio page.

As of December 31, 2018, the fund was 53.8% U.S.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by bluquark » Fri Jan 18, 2019 7:38 pm

Anyway, Total World admiral shares is a great development and overdue. It opens up a new simple portfolio option of "two-fund portfolio".

The main issue with single-fund portfolios using e.g. LifeStrategy is the tax efficiency is lacking for those of us with taxable accounts. And the problem with three-fund is the unnecessary decision and rebalancing of ex-US percent which causes so much angst. But a two-fund solution (or 3-fund, with Total World Stock, Total Bond in tax-advantaged, and muni bonds in taxable) is a perfect combination of tax efficiency and simplicity.

I'm already tracking that as the benchmark for my current portfolio, and I'll probably switch to it when I retire (anticipating I'll manage to donate out enough of my capital gains on my current holdings, and/or have a low-income year where I can cheaply realize them).

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Jayhawker » Fri Jan 18, 2019 7:45 pm

Still trying to decide if global cap weight the right way to go for me personally given additional currency volatility of international weighed against the concentration of my human capital in the US.

At the very least Admiral Total World is another option as an alternate fund for tax loss harvesting a portfolio of Total US and Total International.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by MnD » Fri Jan 18, 2019 8:47 pm

http://www.ftse.com/Analytics/FactSheet ... me=GEISLMS

Here is the URL for the fact sheet on the index itself (FTSE Global All Cap) that Vanguard Total World Stock is tracking.
Updated monthly and a nice nice summary of what you own with VG Total World Stock.
The fund has as approximately as many stocks as the index (~8000) so is not sampling but rather is using full completion.
Total Stock Market and Total International Stock market track different indices which accounts for the disparity between the sum of these funds and Total World. The difference likely hinges on what very small cap funds the indices define as being sufficiently liquid and investable, and the result is likely inconsequential.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by TimeRunner » Fri Jan 18, 2019 9:22 pm

bluquark wrote:
Fri Jan 18, 2019 7:38 pm
...But a two-fund solution (or 3-fund, with Total World Stock, Total Bond in tax-advantaged, and muni bonds in taxable) is a perfect combination of tax efficiency and simplicity....
For Fed retirees, Total World in TIRA and Roth at Vanguard, Schwab, or Fido, and TSP G Fund for bonds in the TSP (Thrift Savings Plan) is sweet.
One cannot enlighten the unconscious.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Sat Jan 19, 2019 12:11 pm

siamond wrote:
Fri Jan 18, 2019 9:55 am
Will be lovely to see it happening. My elder son invests in Total-World and I invest in Int'l Small.

The difference between ETF and MF/Admiral is puzzling. This is the same fund (cf. Vanguard's patent). Yes, investor shares are on their way out, but I thought this would be a great equalizer between all fund flavors, ETFs included. I don't get it.
VT - $11.8 B (ETF)
VTWSX - $1.7 B (Investor)
VTWIX - $2.5 B (Institutional)
Total - $16.0 B

VSS - $6.0 B (ETF)
VFSVX - $822.6 MM (Investor)
VFSNX - $191.5 MM (Institutional)
Total - $6.0 B

I was thinking perhaps that there was perhaps less money proportionally in the Investor Shares of ex-US Small Cap compared to the ETF than for the Investor Shares of Total World, but that really isn't the case. Total World has a lot more institutional money, but the ETF and Investor Shares of Total World both have about twice the assets of the corresponding ex-US Small Cap funds.

So I'm back to not knowing why Total World Admiral Shares are getting the same pricing as the ETF, while ex-US Small Cap Admiral Shares are not.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Vulcan » Sun Jan 20, 2019 5:56 pm

jhfenton wrote:
Thu Jan 17, 2019 10:00 am
Vanguard original filed the draft prospectuses on November 19, 2018 with an effective date 60 days later, so some of us were hoping the funds would launch tomorrow. Vanguard's filing today delays the effective date until February 5, 2019.
It occurred to me that they probably chose to postpone so as to avoid posting an upbeat announcement right beside their memorial to Jack Bogle.

If so, it is an understandable, and prudent choice, as we would expect from Vanguard.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by KJVanguard » Sun Jan 20, 2019 9:07 pm

I wonder if Taylor is going to change to advocating the 2-fund portfolio now that the entire world can be had for a most minimal price? :D 33% less funds!

I do appreciate that International Small Caps will be cheaper as I own both the mutual fund & ETF versions of it. I always enjoy saving money.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by asset_chaos » Mon Jan 21, 2019 1:25 am

KJVanguard wrote:
Sun Jan 20, 2019 9:07 pm
I wonder if Taylor is going to change to advocating the 2-fund portfolio now that the entire world can be had for a most minimal price? :D 33% less funds!
Taylor, of course, will speak for himself, but I suspect his answer will be 'no'.
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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by KJVanguard » Mon Jan 21, 2019 1:44 am

asset_chaos wrote:
Mon Jan 21, 2019 1:25 am
KJVanguard wrote:
Sun Jan 20, 2019 9:07 pm
I wonder if Taylor is going to change to advocating the 2-fund portfolio now that the entire world can be had for a most minimal price? :D 33% less funds!
Taylor, of course, will speak for himself, but I suspect his answer will be 'no'.
I suspect the same.

Everyone who drinks the Vanguard Kool Aid is really into cap weighting: Own US stocks cap weighted in TSM. Own US bonds cap weighted in Total Bond Index. Own international stocks cap weighted in Total International. Oddly, this great love affair with cap weighting doesn't apply to all the stocks in the world. Now why is that? Other than looking at past performance which we all (supposedly) know is not indicative of future results.

For full disclosure I do not own Total World myself and have no desire to buy it. I actually am one of the few who overweight international at 55% of my equity holdings and within my international holdings I again overweight EM. Come back in 30 years when I'm 75 (if still alive) and we can discuss if I was right or wrong with my bet.

I certainly don't mean any insult to the 3-fund portfolio. I certainly is quite reasonable, but it too is a bet on international even if nobody else says so. It's underweights international, betting that it will underperform in the FUTURE. Of course, if you know international will underperform you could simply weight it at 0% and avoid that nasty drag on performance (as John Bogle advocated with his 100% US portfolio). I will admit that Bogle never said he felt you could ignore international as it underperforms, though it's hard to come up with any other reason than past performance to underweight (or entirely avoid) international.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by jhfenton » Mon Jan 21, 2019 6:58 am

KJVanguard wrote:
Mon Jan 21, 2019 1:44 am
For full disclosure I do not own Total World myself and have no desire to buy it. I actually am one of the few who overweight international at 55% of my equity holdings and within my international holdings I again overweight EM. Come back in 30 years when I'm 75 (if still alive) and we can discuss if I was right or wrong with my bet.
I'm in roughly the same boat, although I'm only 50% ex-US. (I over-rebalanced to 55% ex-US for 2017, but I went back to my baseline 50% in 2018.) My ex-US is about half EM. Most of the rest is in VSS (ex-US Small Cap) with a small, but growing position in VTIAX (Total International Admiral) in my wife's relatively new 401(k).

I was about to say that I couldn't really use Total World anyway, because I have to keep everything balanced with our 401(k)s, but that's not accurate. I could use the Vanguard Target Retirement funds available in both of our 401(k)s and Total World in our IRAs and Roths. But doing so would mean abandoning the small-cap, value, and EM tilts that I've maintained for more than 20 years.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by lostdog » Mon Jan 21, 2019 9:06 am

I hit my band awhile ago and accidentally rebalanced into much international. I have about 52% international at the moment. I am just leaving it. I need to update my signature.
VTWAX and chill.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Cash » Mon Jan 21, 2019 10:21 am

asset_chaos wrote:
Mon Jan 21, 2019 1:25 am
KJVanguard wrote:
Sun Jan 20, 2019 9:07 pm
I wonder if Taylor is going to change to advocating the 2-fund portfolio now that the entire world can be had for a most minimal price? :D 33% less funds!
Taylor, of course, will speak for himself, but I suspect his answer will be 'no'.
That was his answer when I asked seven years ago:
Taylor Larimore wrote:
Sun Jan 01, 2012 10:08 pm
Cash wrote:Taylor, might you one day simplify even further to Vanguard Total World + Total Bond Market?
Cash:

I have considered simplifying The Three Fund Portfolio to a Two Fund Portfolio (Total World + Total Bond Market). However, keeping Total U.S. Stock Market and Total International Stock Market separate has several advantages (edited 4-21-2017)

Usually lower Fund/ETF Expense Ratios: Total Stock Market (VTSAX & VT) = .05%; Total International (VTIAX & VXUS) = .11%; Total World (VTWSX = .21%; VT = 0.11%).

Lower Turnover (hidden cost): Total Stock Market = 4.0%; Total International = 3.1%; Total World = 14.8%

Tax Efficiency (5 years): Total Stock Market =.56; Total International = 1.09; Total World = .82

Better diversification (lower risk): Total U.S. Stock Market and Total International (combined) hold 9,773 stocks. Total World holds 7,774.

More U.S. stocks: Total World contains approximately 53% U.S. stocks. Many authorities, including Mr. Bogle, believe this is inadequate for U.S. investors.

Flexibility: The ratio between U.S. Total Stock Market and Total International is flexible for investors wherever they live in the world or whatever their desire.

Admiral Shares: Unlike Total Stock Market and Total International, Total World has no Admiral shares.

Best wishes.
Taylor
Seems like the only material difference is the last point.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by MnD » Mon Jan 21, 2019 10:43 am

TimeRunner wrote:
Fri Jan 18, 2019 9:22 pm
bluquark wrote:
Fri Jan 18, 2019 7:38 pm
...But a two-fund solution (or 3-fund, with Total World Stock, Total Bond in tax-advantaged, and muni bonds in taxable) is a perfect combination of tax efficiency and simplicity....
For Fed retirees, Total World in TIRA and Roth at Vanguard, Schwab, or Fido, and TSP G Fund for bonds in the TSP (Thrift Savings Plan) is sweet.
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c

Of course many feds have other accounts and I agree that Total World in other accounts is a simple mix while keeping all fixed income in the G fund given lack of availability of a fixed income fund with these characteristics outside of the TSP. The really nice thing going forward will not be having to fill-in EM and ex-US small cap funds in one or more outside accounts just to approximate Total International overall.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by wassabi » Mon Jan 21, 2019 10:51 am

MnD wrote:
Mon Jan 21, 2019 10:43 am
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c

I wasn't aware. Any idea when exactly this change will take place? I'm new to TSP but looking forward to utilizing the G Fund and potentially the I fund now. I have accounts at Vanguard to get the Total US Stock portion of my portfolio.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by MnD » Mon Jan 21, 2019 10:59 am

wassabi wrote:
Mon Jan 21, 2019 10:51 am
MnD wrote:
Mon Jan 21, 2019 10:43 am
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c

I wasn't aware. Any idea when exactly this change will take place? I'm new to TSP but looking forward to utilizing the G Fund and potentially the I fund now. I have accounts at Vanguard to get the Total US Stock portion of my portfolio.
TSP is silent on this lately probably because they are recompeting the I fund 5-year contract now and have previously stated the I fund reconstitution will be part of the new contract. I expect a lot of details will be released at or just after when the new I fund contract is awarded.

I'd speculate that the "new" I fund when awarded will be tracking a transition index that will move from EAFE to All-country ex-US IMI over X months. Big funds don't make moves like this overnight. EAFE covers less than 60% of ALL-Country ex-US IMI so it's a big change for a $50 Billion fund.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Engineer250 » Mon Jan 21, 2019 1:02 pm

MnD wrote:
Mon Jan 21, 2019 10:43 am
TimeRunner wrote:
Fri Jan 18, 2019 9:22 pm
bluquark wrote:
Fri Jan 18, 2019 7:38 pm
...But a two-fund solution (or 3-fund, with Total World Stock, Total Bond in tax-advantaged, and muni bonds in taxable) is a perfect combination of tax efficiency and simplicity....
For Fed retirees, Total World in TIRA and Roth at Vanguard, Schwab, or Fido, and TSP G Fund for bonds in the TSP (Thrift Savings Plan) is sweet.
Later this year you will be able to roll your own Total World at 53/47 or whatever it is then with TSP C, S and I for an overall ER of 0.03%, assuming the I fund contract holds to 0.03% at renewal. The I fund will be reconstituted later this year to track the MSCI all-country ex-US IMI index so the EM end ex-US small cap "gap" in the TSP will be removed. https://www.msci.com/documents/10199/f2 ... 7dcc44536c

Of course many feds have other accounts and I agree that Total World in other accounts is a simple mix while keeping all fixed income in the G fund given lack of availability of a fixed income fund with these characteristics outside of the TSP. The really nice thing going forward will not be having to fill-in EM and ex-US small cap funds in one or more outside accounts just to approximate Total International overall.
Thanks. This is all good news. Am currently in ex-US small in my VG accounts to balance out the I Fund. So it’s nice I’ll be able to get admiral in another couple weeks here. But looking forward to the I Fund update when I will be able to go back to two or three funds in my VG accounts. Been over a year since they said they would and we still don’t have a fixed date so frustrated but trying to be patient.
Where the tides of fortune take us, no man can know.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Horton » Mon Jan 21, 2019 6:30 pm

This is great news. I've been thinking about moving from Total US / Total International to Total World for some time, but two things have stopped me:

1) The expense ratio on the Total World mutual fund was too high for me to justify the switch.
2) While the expense ratio on the ETF (VT) was palatable, I wanted to avoid the complexity associated with buying ETF shares.

Now, both of my problems have been solved. :beer
🏃 since 2005

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by bluquark » Mon Jan 21, 2019 6:40 pm

Horton wrote:
Mon Jan 21, 2019 6:30 pm
This is great news. I've been thinking about moving from Total US / Total International to Total World for some time, but two things have stopped me:

1) The expense ratio on the Total World mutual fund was too high for me to justify the switch.
2) While the expense ratio on the ETF (VT) was palatable, I wanted to avoid the complexity associated with buying ETF shares.

Now, both of my problems have been solved. :beer
Don't you have a lot of unrealized gains on the Total US though? I would not make this change if it involves a tax hit.

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Horton » Mon Jan 21, 2019 10:15 pm

bluquark wrote:
Mon Jan 21, 2019 6:40 pm
Horton wrote:
Mon Jan 21, 2019 6:30 pm
This is great news. I've been thinking about moving from Total US / Total International to Total World for some time, but two things have stopped me:

1) The expense ratio on the Total World mutual fund was too high for me to justify the switch.
2) While the expense ratio on the ETF (VT) was palatable, I wanted to avoid the complexity associated with buying ETF shares.

Now, both of my problems have been solved. :beer
Don't you have a lot of unrealized gains on the Total US though? I would not make this change if it involves a tax hit.
I’ll just make the change in tax advantaged accounts. I’ll keep VTSAX in taxable because I don’t want the tax hit. In the end, it will give me a slight home country bias and I’m good with that.
🏃 since 2005

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Re: Vanguard Total World Stock and All-World ex-US Small Cap Admiral Shares should launch February 5

Post by Vulcan » Tue Jan 22, 2019 8:42 am

see my comments in red
Cash wrote:
Mon Jan 21, 2019 10:21 am
asset_chaos wrote:
Mon Jan 21, 2019 1:25 am
KJVanguard wrote:
Sun Jan 20, 2019 9:07 pm
I wonder if Taylor is going to change to advocating the 2-fund portfolio now that the entire world can be had for a most minimal price? :D 33% less funds!
Taylor, of course, will speak for himself, but I suspect his answer will be 'no'.
That was his answer when I asked seven years ago:
Taylor Larimore wrote:
Sun Jan 01, 2012 10:08 pm
Cash wrote:Taylor, might you one day simplify even further to Vanguard Total World + Total Bond Market?
Cash:

I have considered simplifying The Three Fund Portfolio to a Two Fund Portfolio (Total World + Total Bond Market). However, keeping Total U.S. Stock Market and Total International Stock Market separate has several advantages (edited 4-21-2017)

Usually lower Fund/ETF Expense Ratios: Total Stock Market (VTSAX & VT) = .05%; Total International (VTIAX & VXUS) = .11%; Total World (VTWSX = .21%; VT = 0.11%).
VT's current 0.10% is in dead heat with 50/50's 0.08%
Lower Turnover (hidden cost): Total Stock Market = 4.0%; Total International = 3.1%; Total World = 14.8%
8.9% as of 12/31/18
Tax Efficiency (5 years): Total Stock Market =.56; Total International = 1.09; Total World = .82
dead heat with 50/50
Better diversification (lower risk): Total U.S. Stock Market and Total International (combined) hold 9,773 stocks. Total World holds 7,774.
8,116 as of 12/31/18, representing - what - 99.999% of world market cap or so?;)
More U.S. stocks: Total World contains approximately 53% U.S. stocks. Many authorities, including Mr. Bogle, believe this is inadequate for U.S. investors.
This is one issue on which I disagreed with Mr. Bogle
Flexibility: The ratio between U.S. Total Stock Market and Total International is flexible for investors wherever they live in the world or whatever their desire.
You can get any ratio you want with Total World Stock, as long as that ratio is global market cap;)
Admiral Shares: Unlike Total Stock Market and Total International, Total World has no Admiral shares.
Admiral shares with 0.10% ER are coming out Feb 5
Seems like the only material difference is the last point.
Not for much longer
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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