SCV fund placement and duplication

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Topic Author
schismal
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Joined: Sat Apr 13, 2019 8:53 pm

SCV fund placement and duplication

Post by schismal » Sat Apr 13, 2019 9:29 pm

Greetings! Noob here. I'm in my early 30s, and I'm finally getting serious about retirement planning. After browsing this forum and reading a few books, I feel confident enough to dip my toe into the waters.

I have a number of different accounts that I'm trying to balance as a single portfolio, and finding the optimal tax placement for certain funds is giving me issues. I have a taxable brokerage, a 403(b) with pre- and post-tax contribution (and in-service Roth conversions), and a standard Roth IRA. These are split between Vanguard and Fidelity.

I'm using TSM (FZROX/VTSAX) and TISM (FZILX/VTIAX) as my core equity funds, and those are easy to place in any type of account. But I would like to tilt toward small cap and value, and I'm having trouble deciding where these funds should be placed.

For domestic SCV, I have access to DFFVX only in my 403(b). I've also considered IJS for taxable and SLYV for my Roth, but I feel that having three separate funds to cover this one asset class is a bit cumbersome, and I'd like to avoid that kind of complexity.

I have the same problem with international small cap and emergent markets. My 403(b) gives me access to DFISX and DFEVX. I could use DLS and DGS in taxable or rIRA, but I'm having trouble figuring out the tax consequences of holding IJS/DLS/DGS in a taxable account. Is their tax inefficiency concerning enough that I should strongly consider using my 403(b) space to hold the tilts (DFFVX, DFISX, and DFEVX)?

My original plan was to take the 3-fund portfolio and expand it to 5/6 funds with the addition of some SCV/EMs. Now I worry that it's starting to get unwieldy simply due to the logistics of optimal fund placement and the possibility of holding multiple funds to cover the same asset class due to availability.

But I also feel like I'm probably way overthinking this. Should I just pack the three DFA funds into my 403(b) and fill the rest of the space with total market funds? Or is it worthwhile to save a few basis points by trying to shove IJS into a taxable account?

livesoft
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Re: SCV fund placement and duplication

Post by livesoft » Sat Apr 13, 2019 9:54 pm

schismal wrote:
Sat Apr 13, 2019 9:29 pm
..., but I feel that having three separate funds to cover this one asset class is a bit cumbersome, and I'd like to avoid that kind of complexity.

I have the same problem with international small cap and emergent markets. My 403(b) gives me access to DFISX and DFEVX. I could use DLS and DGS in taxable or rIRA, but I'm having trouble figuring out the tax consequences of holding IJS/DLS/DGS in a taxable account. Is their tax inefficiency concerning enough that I should strongly consider using my 403(b) space to hold the tilts (DFFVX, DFISX, and DFEVX)?
Why cumbersome?

I would not own DLS nor DGS in taxable. I do own DGS in tax-advantaged, but it is volatile and I think it needs to be bought and sold more than buy-and-hold to have benefit to the portfolio.

In taxable, I try to stick with things like VTI, VV, VEA, VEU for their tax efficiency. Small-caps like VSS, DGS, DLS, VBR, IJS go in tax-advantaged for me.
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Topic Author
schismal
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Re: SCV fund placement and duplication

Post by schismal » Sun Apr 14, 2019 6:14 am

livesoft wrote:
Sat Apr 13, 2019 9:54 pm
Why cumbersome?

I would not own DLS nor DGS in taxable. I do own DGS in tax-advantaged, but it is volatile and I think it needs to be bought and sold more than buy-and-hold to have benefit to the portfolio.

In taxable, I try to stick with things like VTI, VV, VEA, VEU for their tax efficiency. Small-caps like VSS, DGS, DLS, VBR, IJS go in tax-advantaged for me.
Well I just watched 3 funds turn into 8. Maybe it's not cumbersome. Maybe it's commonplace.

Thanks for the insight! I can probably fit all the small caps and EM in my tax-advantaged space (although it forces me to use the DFA funds due to 403(b) options), and it sounds like that would be the best play.

Taxable: TSM and TISM
Roth: SLYV, possibly DLS/DGS if needed
403(b): DFISX, DFEVX, possibly DFFVX if needed

Seem reasonable?

Wyodoc
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Re: SCV fund placement and duplication

Post by Wyodoc » Sun Apr 14, 2019 6:20 am

I think that is reasonable. Due to constraints like you I have multiple funds for same asset class. I made an excel spread sheet so it’s not difficult at all to monitor my overall AA.

Keep in mind, IJS and VIOV are quite tax efficient. I’m in a high tax bracket and hold Some VIOV in taxable. I would not hold SLYV in taxable though or DLS, DGS if possible.

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whodidntante
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Re: SCV fund placement and duplication

Post by whodidntante » Sun Apr 14, 2019 6:39 am

DFEVX is a great EM value fund. I don't know of a better one. I used to have a large position in this fund and miss having access to it.
DFFVX is more of a mid cap value fund, but provides excellent value loading and does not have significant negative momentum. I have a large position in this fund. https://www.portfoliovisualizer.com/fac ... e&total1=0
DFISX. Meh. Expensive for the exposure it provides. I might hold VSS in another tax advantaged account instead.
IJS has been tax efficient.

I would use at least DFEVX and DFFVX in the 403b.

After several years of chasing brokerage bonuses, being unwilling to pay for trades, and taking TLH opportunities that arose, I have a large number of funds in my portfolio. It doesn't bother me because I got money in my pocket for each of those decisions. You can use a tool like personal capital or morningstar to keep an overview of what you have.
Last edited by whodidntante on Sun Apr 14, 2019 6:42 am, edited 1 time in total.

Topic Author
schismal
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Re: SCV fund placement and duplication

Post by schismal » Sun Apr 14, 2019 6:41 am

Wyodoc wrote:
Sun Apr 14, 2019 6:20 am
I think that is reasonable. Due to constraints like you I have multiple funds for same asset class. I made an excel spread sheet so it’s not difficult at all to monitor my overall AA.

Keep in mind, IJS and VIOV are quite tax efficient. I’m in a high tax bracket and hold Some VIOV in taxable. I would not hold SLYV in taxable though or DLS, DGS if possible.
Thanks!

I've also made an Excel spreadsheet -- it's the only way to keep tabs on my AA with so many moving parts.

Topic Author
schismal
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Re: SCV fund placement and duplication

Post by schismal » Sun Apr 14, 2019 6:49 am

whodidntante wrote:
Sun Apr 14, 2019 6:39 am
DFEVX is a great EM value fund. I don't know of a better one. I used to have a large position in this fund and miss having access to it.
DFFVX is more of a mid cap value fund, but provides excellent value loading and does not have negative momentum. I have a large position in this fund.
DFISX. Meh. Expensive for the exposure it provides. I might hold VSS in another tax advantaged account instead.
IJS has been tax efficient.

I would use at least DFEVX and DFFVX in the 403b.

After several years of chasing brokerage bonuses, being unwilling to pay for trades, and taking TLH opportunities that arose, I have a large number of funds in my portfolio. It doesn't bother me because I got money in my pocket for each of those decisions. You can use a tool like personal capital or morningstar to keep an overview of what you have.
Appreciate the insight! Interesting that you mention DFISX being a bit subpar. I was actually considering VFSAX instead (or as a supplement), but the only tax-advantaged space I have for VSS/VFSAX is my Roth. Which is an option, but somewhat limited in the overall pool. Still might not be a bad idea.

Edit: got my symbols mixed up. need coffee.

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whodidntante
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Re: SCV fund placement and duplication

Post by whodidntante » Sun Apr 14, 2019 6:59 am

schismal wrote:
Sun Apr 14, 2019 6:49 am
Appreciate the insight! Interesting that you mention DFISX being a bit subpar. From my reading, it seems like the DFA international funds are quite good, but this wouldn't have been my choice for their domestic small cap if I had a voice in the 403 construction. I was actually considering VFSAX instead (or as a supplement), but the only tax-advantaged space I have for VSS/VFSAX is my Roth. Which is an option, but somewhat limited in the overall pool. Still might not be a bad idea.
DFISX is fine but it is expensive for the exposure it provides. Since it does not provide much value exposure you probably want to use a cheaper fund for small caps. I suggest VSS or SCHC as cheaper alternatives. Or if you want factor exposure in international small caps and you're OK with multifactor funds then look at ISCF. https://www.ishares.com/us/products/272 ... factor-etf

DISVX has a much better value exposure and is probably the fund you'd like to have access to.

Topic Author
schismal
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Re: SCV fund placement and duplication

Post by schismal » Sun Apr 14, 2019 7:08 am

whodidntante wrote:
Sun Apr 14, 2019 6:59 am
DISVX has a much better value exposure and is probably the fund you'd like to have access to.
Yes, that's the fund I would have chosen if I had a say in the 403 options. :)

I'll look into the alternatives you suggest -- thanks!

livesoft
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Re: SCV fund placement and duplication

Post by livesoft » Sun Apr 14, 2019 9:51 am

schismal wrote:
Sun Apr 14, 2019 6:41 am
I've also made an Excel spreadsheet -- it's the only way to keep tabs on my AA with so many moving parts.
No, it is not the only way. There are even easier ways as discussed in this thread:
viewtopic.php?t=150267
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fennewaldaj
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Re: SCV fund placement and duplication

Post by fennewaldaj » Sun Apr 14, 2019 10:59 pm

schismal wrote:
Sun Apr 14, 2019 6:14 am


Well I just watched 3 funds turn into 8. Maybe it's not cumbersome. Maybe it's commonplace.

I don't really find having multiple funds in the same asset class particularly cumbersome. They just all get added in the SCV (or whatever other category in my spreadsheet). So you have say 5-6 categories but 10 funds. Its really not too hard to keep track of. Having asset classes in multiple accounts can actually make it easier to keep things in balance. Of course people have different options on what is complicated to keep track of.

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