Vanguard Confusion VT/BNDW

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bennettg
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Vanguard Confusion VT/BNDW

Post by bennettg »

Hi,

I've read about the Vanguard EFTs that combine all world stock (VT) and all world bond (BNDW). I'm a simple guy, but disciplined.

Is it accurate to say that VT is the same as VTI+VXUS? Likewise, it is accurate to say that BNDW is the same as BND+BNDX?

I have tax advantaged accounts, but need to use schwab because of my employer. I would prefer to buy the mutual fund versions (VTSMX, VGTSX, VBMFX and VTIBX) but it is too expensive to buy them at schwab...so ETFs at $4.95. If I can make a 4 fund into a 2 fund, then I have halved my commission costs for each time I buy.

Am I looking at this the right way? I want to replicate one of the VG Target Date Funds as best as I can at Schwab.

Thank you.
bloom2708
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Re: Vanguard Confusion VT/BNDW

Post by bloom2708 »

The Total World versions are not the same as Total US + Total International.

Total US has ~3,600 stocks.
Total Int has ~6,700 stocks
Total World has ~8,900 stocks

Returns will likely be very similar, so you have to summarize.

Total World is a bit more expensive .10% expense ratio. It owns ~1,100 less stocks. Are those 1,100 the "right" stocks? Will the small difference in expense ratio make a difference. Total US is .04% and Total International is .11%. Averaged is a bit less.

I use Total US + Total International. I keep my international percentage at 20-25% of stocks. This is lower than the Total World mix of US and International which is 57/43.

For simplicity and auto rebalancing it might make sense to use Total World. Probably pretty close to an even battle.
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KyleAAA
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Re: Vanguard Confusion VT/BNDW

Post by KyleAAA »

They aren't the same, namely because the global funds will have their relative allocations between domestic and international assets shift due to market moves. With VTI + VXUS and BND + BNDW, you control it. There are also likely to be differences in exact allocations wrt market cap, UK vs Japanese bonds, etc, but I wouldn't expect that to make as large a difference.

Why not just use Schwab's ETFs instead? No commission.
Last edited by KyleAAA on Wed Feb 13, 2019 12:13 pm, edited 2 times in total.
retiredjg
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Re: Vanguard Confusion VT/BNDW

Post by retiredjg »

Are they the same? Yes and no.

Yes in the sense that the same asset classes are represented. No in the sense that the ratios are different. For example, BNDW is 48% US and 52% foreign. This is a much different ratio from what is held in the target funds which I think is 80% US and 20% foreign (but I have not checked lately).

It appears you prefer using Vanguard products, but keep in mind that Vanguard products are only "better" when they are cheaper than other companies' products. That is not the case at Schwab where you have to pay transaction fees for each purchase.

I think you would be much better off picking from Schwab's no transaction fee list of ETFs. Or using one of their INDEX (not regular) target funds.
lukestuckenhymer
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Re: Vanguard Confusion VT/BNDW

Post by lukestuckenhymer »

I use VTWAX in tax-deferred for ultimate simplicity and VTSAX/VTIAX in taxable for tax loss harvesting.
MnD
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Re: Vanguard Confusion VT/BNDW

Post by MnD »

bennettg wrote: Wed Feb 13, 2019 11:28 am Hi,

I've read about the Vanguard EFTs that combine all world stock (VT) and all world bond (BNDW). I'm a simple guy, but disciplined.

Is it accurate to say that VT is the same as VTI+VXUS? Likewise, it is accurate to say that BNDW is the same as BND+BNDX?

I have tax advantaged accounts, but need to use schwab because of my employer. I would prefer to buy the mutual fund versions (VTSMX, VGTSX, VBMFX and VTIBX) but it is too expensive to buy them at schwab...so ETFs at $4.95. If I can make a 4 fund into a 2 fund, then I have halved my commission costs for each time I buy.

Am I looking at this the right way? I want to replicate one of the VG Target Date Funds as best as I can at Schwab.

Thank you.
You can halve your commission costs by using SCHB and SCHZ instead of VTI and BND. And reduce expense ratios slightly.
You won't be able to replicate Target date funds with VT and BNDW because they don't hold those US ex-US ratios in Target date funds and have other differences.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
retiredjg
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Re: Vanguard Confusion VT/BNDW

Post by retiredjg »

With the exception of the international bond ETF, you can get everything you want at Schwab commission free. It won't be a Vanguard product, but likely a Schwab or iShares product and there is no reason to avoid either one of those.

If you really want foreign bonds, buy BNDW once or twice a year and call it good.

Or here is an example of one of their target index funds https://www.schwab.com/public/schwab/in ... ol%3DSWYMX which also does not contain foreign bonds but does have a little touch of REIT.
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bennettg
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Re: Vanguard Confusion VT/BNDW

Post by bennettg »

Thank you for all the responses. They are appreciated.

retiredjg wrote: Wed Feb 13, 2019 1:22 pm With the exception of the international bond ETF, you can get everything you want at Schwab commission free. It won't be a Vanguard product, but likely a Schwab or iShares product and there is no reason to avoid either one of those.

If you really want foreign bonds, buy BNDW once or twice a year and call it good.

Or here is an example of one of their target index funds https://www.schwab.com/public/schwab/in ... ol%3DSWYMX which also does not contain foreign bonds but does have a little touch of REIT.
In general, what do folks think about offerings from Schwab? Like I mentioned, I'm not the sharpest tool so I don't even try to understand all the technical talk. I do know Vanguard is supposed to have its investors best interests at heart since they own the company.
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jhfenton
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Re: Vanguard Confusion VT/BNDW

Post by jhfenton »

retiredjg wrote: Wed Feb 13, 2019 12:12 pm Yes in the sense that the same asset classes are represented. No in the sense that the ratios are different. For example, BNDW is 48% US and 52% foreign. This is a much different ratio from what is held in the target funds which I think is 80% US and 20% foreign (but I have not checked lately).
Vanguard Target Retirement funds are 60% US equity, 40% ex-US equity (70% US bonds, 30% ex-US bonds). Their equity allocation was 70/30 US/ex-US in the past, but they changed several years ago.
retiredjg
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Re: Vanguard Confusion VT/BNDW

Post by retiredjg »

bennettg wrote: Wed Feb 13, 2019 1:45 pm In general, what do folks think about offerings from Schwab? Like I mentioned, I'm not the sharpest tool so I don't even try to understand all the technical talk. I do know Vanguard is supposed to have its investors best interests at heart since they own the company.
Even if Vanguard has its investors best interests at heart, that would not apply much to Vanguard products bought at Schwab....which apparently you are required to do. In fact, paying the fee to buy the Vanguard products at Schwab completely undermines the "betterness" (low costs) that is supposed to be produced by the Vanguard products.

Schwab has Schwab products and some from other companies like iShares that can be bought with no transaction fee.

The most common complaint about the Schwab products is that they contain too much cash - maybe 5% or 6% in cash instead of a smaller amount in other funds. There's a reason for that - Schwab uses your cash to make a little money on the side (legally). This is one of the ways they can offer the very low expense ratios they offer. You might make a tiny bit less because of this "high" allocation to cash. But you are paying very little in fund fees as well.

For this reason, the Schwab products would get an A- in my book instead of an A. This means I might choose an iShares product first but be perfectly satisfied with a Schwab product if that is what I needed to get. And if I preferred target funds, I would not hesitate buying the Schwab Index Target fund that met my needs.

Bottom line is I would not worry at all about buying Schwab products if I needed to, even if Vanguard is where my philosophy lies.
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galeno
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Re: Vanguard Confusion VT/BNDW

Post by galeno »

I'm only familiar with Schwab's ETFs. So.

VT ~ 50% SCHB + 40% SCHF + 10% SCHE

Forget hedged non-USD non-USA bonds for now.

BND = SCHZ
KISS & STC.
retiredjg
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Re: Vanguard Confusion VT/BNDW

Post by retiredjg »

retiredjg wrote: Wed Feb 13, 2019 2:05 pm
bennettg wrote: Wed Feb 13, 2019 1:45 pm In general, what do folks think about offerings from Schwab? Like I mentioned, I'm not the sharpest tool so I don't even try to understand all the technical talk. I do know Vanguard is supposed to have its investors best interests at heart since they own the company.
Even if Vanguard has its investors best interests at heart, that would not apply much to Vanguard products bought at Schwab....which apparently you are required to do. In fact, paying the fee to buy the Vanguard products at Schwab completely undermines the "betterness" (low costs) that is supposed to be produced by the Vanguard products.

Schwab has Schwab products and some from other companies like iShares that can be bought with no transaction fee.

The most common complaint about the Schwab products is that they contain too much cash - maybe 5% or 6% in cash instead of a smaller amount in other funds. There's a reason for that - Schwab uses your cash to make a little money on the side (legally). This is one of the ways they can offer the very low expense ratios they offer. You might make a tiny bit less because of this "high" allocation to cash. But you are paying very little in fund fees as well.

Edited to add...I decided to do a little research and comparison on the amount of cash in various funds available at Schwab. I did not find "high" percentages of cash in the Schwab ETFs or mutual funds I looked at (I only looked at a few). I did find some in the Target Funds. It made me wonder if this "problem" (if it actually is a problem) is confined to just the target funds. Even if it is, the target fund expense ratios are so low, I would not hesitate to use them.

For this reason, the Schwab products would get an A- in my book instead of an A. This means I might choose an iShares product first but be perfectly satisfied with a Schwab product if that is what I needed to get. And if I preferred target funds, I would not hesitate buying the Schwab Index Target fund that met my needs.

Bottom line is I would not worry at all about buying Schwab products if I needed to, even if Vanguard is where my philosophy lies.
UpperNwGuy
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Re: Vanguard Confusion VT/BNDW

Post by UpperNwGuy »

Just buy the Schwab ETFs in the proper ratios to create your own target date fund.
Register44
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Re: Vanguard Confusion VT/BNDW

Post by Register44 »

Why does BNDW hold more international than US?
tj
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Re: Vanguard Confusion VT/BNDW

Post by tj »

Register44 wrote: Sat Nov 21, 2020 7:50 pm Why does BNDW hold more international than US?
Because there are more international bonds than domestic bonds?
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Re: Vanguard Confusion VT/BNDW

Post by Register44 »

tj wrote: Sat Nov 21, 2020 10:34 pm
Register44 wrote: Sat Nov 21, 2020 7:50 pm Why does BNDW hold more international than US?
Because there are more international bonds than domestic bonds?
Makes sense. I guess I'm just surprised because VT is mostly US for equities. Then ishares AOM/AOR/AOK multi asset etfs put more into US bonds than international as does vanguard in its multi asset mutual funds.
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Re: Vanguard Confusion VT/BNDW

Post by 000 »

Register44 wrote: Sat Nov 21, 2020 10:52 pm
tj wrote: Sat Nov 21, 2020 10:34 pm
Register44 wrote: Sat Nov 21, 2020 7:50 pm Why does BNDW hold more international than US?
Because there are more international bonds than domestic bonds?
Makes sense. I guess I'm just surprised because VT is mostly US for equities. Then ishares AOM/AOR/AOK multi asset etfs put more into US bonds than international as does vanguard in its multi asset mutual funds.
VT and BNDW are constructed using world free float market cap weight. US makes a larger percentage of stock market cap than bond market cap.
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Re: Vanguard Confusion VT/BNDW

Post by rkhusky »

Register44 wrote: Sat Nov 21, 2020 10:52 pm
tj wrote: Sat Nov 21, 2020 10:34 pm
Register44 wrote: Sat Nov 21, 2020 7:50 pm Why does BNDW hold more international than US?
Because there are more international bonds than domestic bonds?
Makes sense. I guess I'm just surprised because VT is mostly US for equities. Then ishares AOM/AOR/AOK multi asset etfs put more into US bonds than international as does vanguard in its multi asset mutual funds.
VT holds more US stocks currently. It doesn't always.
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Re: Vanguard Confusion VT/BNDW

Post by Register44 »

000 wrote: Sat Nov 21, 2020 10:56 pm
VT and BNDW are constructed using world free float market cap weight. US makes a larger percentage of stock market cap than bond market cap.
rkhusky wrote: Sun Nov 22, 2020 8:25 am
VT holds more US stocks currently. It doesn't always.
So in this case it would seem going 50/50 VT/BNDW would give you Sharpes world portfolio. I guess the only difference is he wanted to let the FTSE determine the amount of stocks vs bonds. But one could just use their own preferred allocation to stocks and bonds. Seems like a pretty simple set and forget portfolio.
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Re: Vanguard Confusion VT/BNDW

Post by abuss368 »

bennettg wrote: Wed Feb 13, 2019 11:28 am Hi,

I've read about the Vanguard EFTs that combine all world stock (VT) and all world bond (BNDW). I'm a simple guy, but disciplined.

Is it accurate to say that VT is the same as VTI+VXUS? Likewise, it is accurate to say that BNDW is the same as BND+BNDX?

I have tax advantaged accounts, but need to use schwab because of my employer. I would prefer to buy the mutual fund versions (VTSMX, VGTSX, VBMFX and VTIBX) but it is too expensive to buy them at schwab...so ETFs at $4.95. If I can make a 4 fund into a 2 fund, then I have halved my commission costs for each time I buy.

Am I looking at this the right way? I want to replicate one of the VG Target Date Funds as best as I can at Schwab.

Thank you.
You wont go wrong with that portfolio. However, it is not the same at Total Stock and Total International Stock. The individual funds have much more diversification
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Re: Vanguard Confusion VT/BNDW

Post by abuss368 »

Have you considered moving the non-employer accounts directly to Vanguard?
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