VTSAX versus VTCLX/VTMSX

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whzup444
Posts: 14
Joined: Tue Dec 24, 2019 10:10 am

VTSAX versus VTCLX/VTMSX

Post by whzup444 » Sun Jan 12, 2020 9:23 pm

Quick question - for my taxable investment portfolio - which makes more sense? VTSAX versus VTCLX(90%)/VTMSX(10%). I realize there are lots of threads in the past written about this, though specifically wanted to ask given I'm in a high tax bracket and live in a high-tax state.

The latter 2 funds are tax managed, so have slightly lower dividends as compared to VTSAX. Maybe also slightly better performance, though offset by slightly higher expense ratios (0.09% for Admiral Shares for Tax-Advantaged Funds versus 0.04% for VTSAX).

For qualified dividends, I'll be in the highest federal tax bracket (e.g. 20% + 3.8% net investment income tax) + state tax (~10%) = ~33.8%
For ordinary dividends, I'll be in either the 35% or 37% federal tax bracket + state tax (~10%) = 45-47%.

UpperNwGuy
Posts: 2881
Joined: Sun Oct 08, 2017 7:16 pm

Re: VTSAX versus VTCLX/VTMSX

Post by UpperNwGuy » Sun Jan 12, 2020 9:35 pm

VTSAX - Vanguard Total Stock Market Index Fund
VTCLX - Vanguard Tax-Managed Capital Appreciation Fund
VTMSX - Vanguard Tax-Managed Small Cap-Fund

anil686
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Joined: Thu May 08, 2014 12:33 pm

Re: VTSAX versus VTCLX/VTMSX

Post by anil686 » Sun Jan 12, 2020 9:39 pm

To me - and I am in the same bracket - I have a small tilt to small cap via the TM small cap fund and pair it with VTSAX. If I had to do it over again, I probably would have used VTCLX but I don’t think it matters much - JMO though....

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grabiner
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Location: Columbia, MD

Re: VTSAX versus VTCLX/VTMSX

Post by grabiner » Mon Jan 13, 2020 9:00 pm

See Tax-managed fund comparison on the wiki. In the top tax bracket, using the two tax-managed funds is worth the higher cost, for the tax benefit of a lower dividend yield on TM Capital Appreciation and more qualified dividends on TM Small-Cap.

If Vanguard has a muni fund for your state, you might consider holding that fund in your taxable account for part of your bond allocation, and more stock in your IRA or 401(k).
Wiki David Grabiner

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