Vanguard VXUS QDI% 2017

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sungchiahao
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Vanguard VXUS QDI% 2017

Post by sungchiahao » Tue Feb 13, 2018 5:37 pm

Hi All,

I just got my 2017 1099 document and saw my VXUS ETF generated 66% of QDI. I looked at the historical posted data for VXUS and 66% is the lowest ever. I only bought shares and didn't sell any VXUS in 2017. Is Vanguard's form correct?

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triceratop
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Re: Vanguard VXUS QDI% 2017

Post by triceratop » Tue Feb 13, 2018 5:38 pm

"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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walletless
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Re: Vanguard VXUS QDI% 2017

Post by walletless » Tue Feb 13, 2018 8:08 pm

its correct. I am really questioning whether to hold Total International in taxable going forward.

anil686
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Re: Vanguard VXUS QDI% 2017

Post by anil686 » Tue Feb 13, 2018 8:11 pm

walletless wrote:
Tue Feb 13, 2018 8:08 pm
its correct. I am really questioning whether to hold Total International in taxable going forward.
I feel the same - I now wish I had just kept as much TSM as possible in taxable and kept TISM (to the extent possible) in my 401K and IRA - JMO though...

BigJohn
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Re: Vanguard VXUS QDI% 2017

Post by BigJohn » Tue Feb 13, 2018 8:15 pm

Have you looked at the trade off of losing the foreign tax credit if you hold in IRA/401K?

livesoft
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Re: Vanguard VXUS QDI% 2017

Post by livesoft » Tue Feb 13, 2018 8:22 pm

There are other international funds around. For instance I hold both VEU and VEA in taxable, Roth, and tax-deferred. I held VSS in taxable a few years ago, but noticed that it wasn't so tax-efficient and now hold it only in tax-advantaged. VEA is the decendent of the old Vanguard Tax-Managed International fund.

But even VEU and VEA do not have more than 72% qualified dividend income. The Vanguard Emerging Markets Select Stock Fund (not to be confused with the other EM fund) has about 80% QDI. That may be the highest QDI-percentage for a Vanguard international fund.

OTOH, Vanguard Total Stock Market Index is also increasing its percentage of non-qualified divided income and becoming less tax efficient.

What about non-Vanguard ETFs of foreign equities? Are there some with greater than 92% or so QDI?
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cookymonster
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Re: Vanguard VXUS QDI% 2017

Post by cookymonster » Tue Feb 13, 2018 8:38 pm

SCHF had a ratio of 0.899 in 2016. Don't see 2017 anywhere yet. I now not only put new intl holdings in it, but it would also take a huge loss for me to exchange it to something else in a TLH event.

SlowMovingInvestor
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Re: Vanguard VXUS QDI% 2017

Post by SlowMovingInvestor » Tue Feb 13, 2018 8:53 pm

Here's another way to look at it.

Lets assume 30% of the total return of the fund comes from dividends. Of that 30%, 33% is non qualified. So 10% of the total return is non qualified. On that 10%, you would pay an extra 15%-20% in tax (in 2018). So you'd be paying an extra 1.5% to 2% of the fund's return extra in taxes. if the fund returns 8%, you're paying .16% extra in taxes.

You can tweak the numbers to match actual returns, but it doesn't seem substantial enough by itself to justify moving to a tax deferred account -- especially when you take the foreign tax credit into account.

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Re: Vanguard VXUS QDI% 2017

Post by SlowMovingInvestor » Tue Feb 13, 2018 8:58 pm

livesoft wrote:
Tue Feb 13, 2018 8:22 pm

What about non-Vanguard ETFs of foreign equities? Are there some with greater than 92% or so QDI?
https://www.ishares.com/us/literature/t ... 364617.pdf

Several ETFs that are country specific are at 100% QDI. Even some specific regions such as Europe have high QDI.

livesoft
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Re: Vanguard VXUS QDI% 2017

Post by livesoft » Tue Feb 13, 2018 9:06 pm

SlowMovingInvestor wrote:
Tue Feb 13, 2018 8:58 pm
Several ETFs that are country specific are at 100% QDI. Even some specific regions such as Europe have high QDI.
Thanks.

A couple weeks ago I was looking at the QDI percentage for some funds. Yes, some had 100%, but then they also had capital gains distributions. The link you posted only show QDI, so more research would be needed to know if they had CG distros or not.

Another point is that I would not want performance to suffer. For instance, SCHF previously mentioned has lower performance which its higher QDI may not overcome.

But the bottom line:
Conventional wisdom is anything but.
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