Vanguard Total Stock Market Index Fund Unobservable Inputs

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LTann
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Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by LTann » Mon Mar 05, 2018 2:22 pm

In the Vanguard Total Stock Market Index Fund Annual Report, there are assets that are valued using "unobservable inputs." When I added up the percentages of the assets being valued using these "unobservable inputs" in the Statement of Net Assets, they totaled 41.4% of the asset values. In the schedule of investments, the assets were commonly tagged as "Warrants" or "CVR". I naively thought that the Total Stock Market Index fund would be mainly constructed of the underlying stocks of the Total Stock Market. Now I am wondering exactly what I am invested in and if it is the best whole stock market ETF to be invested in.

carofe
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by carofe » Tue Mar 13, 2018 1:27 pm

Hi LTann,
Welcome to the forum. The Index Fund is successfully tracking the underlying index, so there must be an explanation for the Unobservable Inputs. I'm curious what that means too.
US Total Stock Market + Intermediate Term Bond. That's it.

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triceratop
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by triceratop » Tue Mar 13, 2018 1:53 pm

If you look at the detailed schedule of investments you will find that the numbers do not add up to 41%.

The notes in the Statement of Net Assets only denote that there are assets within that category which are valued in that manner.
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LTann
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by LTann » Tue Mar 13, 2018 1:54 pm

My husband was able to download the annual report into excel and add up the stocks indicated as "unobservable inputs." In the end it isn't a large position. The annual report does not spell it out very well. The only reason I made note when reading the report is because John Bogle always said to read the footnotes!

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saltycaper
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by saltycaper » Tue Mar 13, 2018 1:54 pm

I read only $13,274,000 is based on "unobservable inputs." That's a drop in the mutual fund bucket. Note only Level 3 is categorized this way.
Quod vitae sectabor iter?

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greg24
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by greg24 » Tue Mar 13, 2018 2:06 pm

0.00001%?

FactualFran
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Re: Vanguard Total Stock Market Index Fund Unobservable Inputs

Post by FactualFran » Tue Mar 13, 2018 2:19 pm

LTann wrote:
Tue Mar 13, 2018 1:54 pm
My husband was able to download the annual report into excel and add up the stocks indicated as "unobservable inputs." In the end it isn't a large position. The annual report does not spell it out very well. The only reason I made note when reading the report is because John Bogle always said to read the footnotes!
According to page 31 of the December 31, 2017 Annual Report for the Vanguard Index fund, the market value, in $000, of common stocks in the Vanguard Total Stock Market Index fund per value determination method wers

Code: Select all

661,452,119  Level 1 (Quoted prices in active markets for identical securities)
         87  Level 2 (Other significant observable inputs)
     13,724  Level 3 (Significant unobservable inputs)
The annual report may not "spell it out", but the value of common stock of the fund based on unobservable inputs is much less than the 41.4% given in the opening post, which some would call a large position. The only Level 3 investments of the fund are classified as common stocks.

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