Are Total Market Funds Like VTI The Gold Standard For Trading off Return/Risk/Efficiency?

[MrCheapo]

Imagine a plot/cube with one dimension being annualized return, another being risk, another being tax efficiency.

Now imagine you are floating in this cube to your special place ... Seriously, a few questions: The ideal investment would be at one apex of this plot/cube which is high yield, low risk, high tax efficiency but I doubt it exists:

a) Do total market funds like VTI give you the best trade-off b/w all three?
b) With SIMILAR risks are their funds which have a higher yield than VTI but are more tax inefficient?
c) With SIMILAR tax efficiencies are their funds which have a higher yield than VTI but are more risky?

I think the answer to c) is moot if you consider highly specialized sector funds so let's stick to broad based index funds.

[Tamalak]

I'll bet you VT (or really, VTI + VXUS at cap for lower ER and higher tax efficiency) is the peak of the cube.

[watchnerd]

Solar panels in a full net metering state with high electricity costs.

The return is tax efficient (you're reducing your bill / selling electricity for energy credits that aren't taxed), it will adjust with inflation with no tax penalty, and the capital investment itself is subsidized via a tax credit.

[UpperNwGuy]

The last time I checked VOO had better returns and better tax-efficiency than VTI, but I'm too lazy to check this again. I suspect it might also have lower risk.

[MrCheapo]

The last time I checked VOO had better returns and better tax-efficiency than VTI, but I'm too lazy to check this again. I suspect it might also have lower risk.

VOO only goes back to 2011 so over 2011-2023 VOO did outperform VTI. But if you compare SPY to VTI for a longer period VTI outperforms it by 0.5% as the 2000s were awful for large cap companies.

[Taylor Larimore]

Mr. Cheapo:

Yes, Total Market Index Funds like VTI are The Gold Standard for Trading off Return/Risk and Efficiency. Here's proof:

Three-Proofs that TSM (Total Stock Market Index Fund) is Efficient .

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: "Total market indexing is the gold standard. Anything else, like sector investing, is a dilution of that standard."

[yankees60]

Solar panels in a full net metering state with high electricity costs.

The return is tax efficient (you're reducing your bill / selling electricity for energy credits that aren't taxed), it will adjust with inflation with no tax penalty, and the capital investment itself is subsidized via a tax credit.

Encapsulates All the advantages of solar in few words!

[nisiprius]

I don't care. VTI is good enough.