Risk of investing a large sum in a small fund (VTABX vs. FBIIX)

[tom8584]

Assume I have to invest $1M in an international ex-us bond fund.

There are two options from Fidelity and Vanguard tracking the same underlying index:
- FBIIX, expense rate 0.06%, Portfolio Net Assets: $180M, about 600 holdings
- VTABX, expense rate 0.11%, Portfolio Net Assets: $163B, about 6,000 holdings

The Fidelity fund is cheaper by $500 per year but it is smaller than the Vanguard option. Net assets are 1% of the other fund and holdings are more concentrated. If I invest in FBIIX, I'll own about 0.5% of the fund. If I invest in VTABX, I'll own 0.0005%.

What considerations would you make around owning 0.5% of a small fund?

Thanks

[vineviz]

Assume I have to invest $1M in an international ex-us bond fund.

There are two options from Fidelity and Vanguard tracking the same underlying index:
- FBIIX, expense rate 0.06%, Portfolio Net Assets: $180M, about 600 holdings
- VTABX, expense rate 0.11%, Portfolio Net Assets: $163B, about 6,000 holdings

The Fidelity fund is cheaper by $500 per year but it is smaller than the Vanguard option. Net assets are 1% of the other fund and holdings are more concentrated. If I invest in FBIIX, I'll own about 0.5% of the fund. If I invest in VTABX, I'll own 0.0005%.

What considerations would you make around owning 0.5% of a small fund?

Thanks

I doubt either Vanguard or Fidelity would blink at a $1 million buy order on a fund like this.

Personally I wouldn’t let a measly 0.05% cost difference play any role and would prefer the broader exposure of the Vanguard fund.
But the size of the Fidelity fund would also not be a concern to me.

Really you can’t go wrong. I’d you can’t decide, why not $500k in each?

[vineviz]

Assume I have to invest $1M in an international ex-us bond fund.

There are two options from Fidelity and Vanguard tracking the same underlying index:
- FBIIX, expense rate 0.06%, Portfolio Net Assets: $180M, about 600 holdings
- VTABX, expense rate 0.11%, Portfolio Net Assets: $163B, about 6,000 holdings

The Fidelity fund is cheaper by $500 per year but it is smaller than the Vanguard option. Net assets are 1% of the other fund and holdings are more concentrated. If I invest in FBIIX, I'll own about 0.5% of the fund. If I invest in VTABX, I'll own 0.0005%.

What considerations would you make around owning 0.5% of a small fund?

Thanks

I doubt either Vanguard or Fidelity would blink at a $1 million buy order on a fund like this.

Personally I wouldn’t let a measly 0.05% cost difference play any role and would prefer the broader exposure of the Vanguard fund.
But the size of the Fidelity fund would also not be a concern to me.

Really you can’t go wrong. I’d you can’t decide, why not $500k in each?

Plus, the Vanguard fund is available as an ETF at only 8bps. That’s my first choice overall.

[tom8584]

Good point. And for everyone's reference, that ETF would be BNDX.