Which is better for taxable account: VXUS or VEU?
- Houston101
- Posts: 103
- Joined: Fri Feb 26, 2010 2:15 pm
Which is better for taxable account: VXUS or VEU?
I have seen the threads here:
http://www.bogleheads.org/forum/viewtopic.php?t=67790
http://www.bogleheads.org/forum/viewtopic.php?t=70171
I want to buy and hold an etf for the long run in an taxable account. Would you guys suggest that VXUS has a higher probability of being kept open and being improved (lower expenses etc)?
What etf (VXUS or VEU) would you guys recommend?
Please advise.
P.S. I called Vanguard too but she just read me the details of the ETF and wouldn't recommend either.
http://www.bogleheads.org/forum/viewtopic.php?t=67790
http://www.bogleheads.org/forum/viewtopic.php?t=70171
I want to buy and hold an etf for the long run in an taxable account. Would you guys suggest that VXUS has a higher probability of being kept open and being improved (lower expenses etc)?
What etf (VXUS or VEU) would you guys recommend?
Please advise.
P.S. I called Vanguard too but she just read me the details of the ETF and wouldn't recommend either.
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- Posts: 427
- Joined: Wed Dec 01, 2010 10:20 am
There is no way to know "which is better" at this point in time.
VXUS:
Pros- total int'l ex-US includes developed, emerging, large and some small caps. Expense ratio is reported to be 0.20%.
Cons - not much daily trading volume, so average bid/ask spread is 0.07. Novices will probably get poor prices.
VEU - Same as VXUS, but no small caps. Get small caps with VSS. 15-times the trading volume, so average bid/ask spread is 0.01. Expense ratio reported to be 0.22%.
Average bid/ask spread from Vanguard: https://advisors.vanguard.com/VGApp/iip ... daskspread
If you want to overweight small-cap, then VEU is better because you will be buying VSS anyways.
If you don't want to be bothered with bid/ask spread, limit orders, and other nuances of ETFs, then buy the mutual fund: VGTSX or VTIAX is clearly better than VFWIX.
VXUS:
Pros- total int'l ex-US includes developed, emerging, large and some small caps. Expense ratio is reported to be 0.20%.
Cons - not much daily trading volume, so average bid/ask spread is 0.07. Novices will probably get poor prices.
VEU - Same as VXUS, but no small caps. Get small caps with VSS. 15-times the trading volume, so average bid/ask spread is 0.01. Expense ratio reported to be 0.22%.
Average bid/ask spread from Vanguard: https://advisors.vanguard.com/VGApp/iip ... daskspread
If you want to overweight small-cap, then VEU is better because you will be buying VSS anyways.
If you don't want to be bothered with bid/ask spread, limit orders, and other nuances of ETFs, then buy the mutual fund: VGTSX or VTIAX is clearly better than VFWIX.
Heh...this can be a bother. I'm learning (by fire) about ETFs using my Roth account currently; just a small portion of our portfolio overall. I've already made a few blunders that could've been costly with a large portfolio, but thankfully have only been costing me $10-20 each since the account is small. I consider it the price of learning.livesoft wrote: If you don't want to be bothered with bid/ask spread, limit orders, and other nuances of ETFs, then buy the mutual fund: VGTSX or VTIAX is clearly better than VFWIX.
- Houston101
- Posts: 103
- Joined: Fri Feb 26, 2010 2:15 pm
Yeah but you have to deal with capital gains/distributions with VITAX even you are only accumulating and didn't sell anything. If it wasn't for this drawback I would want to do the same.texas_archer wrote:purchase the Fund Version of VXUS (VTIAX). This way I don't have to worry about a discount/premium value when buying.
You do that with an ETF as well, and it is less convenient. With a mutual fund, you can automatically reinvest dividends in the fund if you want; with an ETF, the dividend has to go to your money-market fund, and you will need another transaction when you are ready to reinvest dividends.Houston101 wrote:Yeah but you have to deal with capital gains/distributions with VITAX even you are only accumulating and didn't sell anything. If it wasn't for this drawback I would want to do the same.texas_archer wrote:purchase the Fund Version of VXUS (VTIAX). This way I don't have to worry about a discount/premium value when buying.
- Houston101
- Posts: 103
- Joined: Fri Feb 26, 2010 2:15 pm
I am sorry, I should have been more clear. I was referring to the the tax gains one has to report if you are holding a mutual fund even if there are no dividends just because of the redemptions or shraes being sold by the mutual fund it self but this headache is avoided by the ETF because of the unique structure of the ETF's.grabiner wrote:You do that with an ETF as well, and it is less convenient. With a mutual fund, you can automatically reinvest dividends in the fund if you want; with an ETF, the dividend has to go to your money-market fund, and you will need another transaction when you are ready to reinvest dividends.Houston101 wrote:Yeah but you have to deal with capital gains/distributions with VITAX even you are only accumulating and didn't sell anything. If it wasn't for this drawback I would want to do the same.texas_archer wrote:purchase the Fund Version of VXUS (VTIAX). This way I don't have to worry about a discount/premium value when buying.
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- Posts: 3971
- Joined: Tue Sep 22, 2009 7:56 pm
Houston101 wrote: I am sorry, I should have been more clear. I was referring to the the tax gains one has to report if you are holding a mutual fund even if there are no dividends just because of the redemptions or shraes being sold by the mutual fund it self but this headache is avoided by the ETF because of the unique structure of the ETF's.
At Vanguard there is no difference between ETF & Mutual Fund, since ETF shares are just different share classes of the same funds.
So, if your mutual funds would have capital gains then ETF would have them too. VSS had capital gains over the last 2 years.
Re:
What "blunders" did you make when using ETF's in a Roth account?kenyan wrote:Heh...this can be a bother. I'm learning (by fire) about ETFs using my Roth account currently; just a small portion of our portfolio overall. I've already made a few blunders that could've been costly with a large portfolio, but thankfully have only been costing me $10-20 each since the account is small. I consider it the price of learning.livesoft wrote: If you don't want to be bothered with bid/ask spread, limit orders, and other nuances of ETFs, then buy the mutual fund: VGTSX or VTIAX is clearly better than VFWIX.
Re: Which is better for taxable account: VXUS or VEU?
Wow, blast from the past. You're asking about a post I made nearly 2 years ago. In any case, I was simply getting a little caught up by the emotions of real-time trading and limit orders, rather than just telling my mutual fund to buy/sell and letting it execute at the end of the day. For example, setting a limit order, seeing the price rise over the next couple of days, capitulating at the new price, only to see the price drop to the level of my original limit order over the next few days.
Retirement investing is a marathon.