RUSF18
Footballguy
Appreciate the info as that particular tax impact wasn't something I was considering. Doesn't seem to matter with the funds I am thinking of, but it could in the future.The way I understand things with ETFs they are allowed to perform stock swaps which don't trigger a sale, so no capital gains. Mutual funds do buy and sell, so there are capital gains distributions which will hit in a taxable account (in an IRA it doesn't matter). So ETFs tend to be a bit more tax efficient. Note that some funds are low turnover and some are shockingly high.I was just thinking of tax liability generated by portfolio turnover. If there are other differences, hopefully Sand or someone else can comment. VOO and VFIAX are based off the same index, so turnover would be the same.RUSF18 said:Appreciate it. A bit confused on something, but maybe I'm just not thinking about this correctly...
You can get turnover rates for ETFs just like funds. This one, MOO, is probably on the higher side, but shows 33%, so check all individually.
http://finance.yahoo.com/q/pr?s=moo&ql=1
I'm on Vanguard's site. The 1-year and 3-year returns before taxes for VOO (S&P 500 ETF) are 13.64% and 20.37%, respectively. Those same returns "after taxes on distributions" are 13.12% and 19.87%.
The Vanguard Admiral Shares index fund (VFIAX) has 1-year and 3-year pre-tax returns of 13.64% and 20.37%, respectively. After taxes on distributions...13.12% and 19.86%.
So off by a 1 bp on the 3 year, but otherwise the same. Is this just unique to the type of ETF/index fund or am I having a "Josh Baskin during the robot building" moment?
If I bought a Vanguard fund and the corresponding ETF in a sheltered account I'd expect they would be damn near identical in performance. It really just comes down to tax efficiency - that's all I was getting at.
Well...why? Just because it's easier to do that because you can't decide on either?Was sort of contemplating putting half in one and half in the other. And just let em go and go and goRUSF18 said:So "better" depends on what you're looking for...some global diversification that also comes with a bit of hedging through the bonds included or a much lower fee paid while still having the growth potential of US stocks.
I'd go for the Vanguard. While the Fidelity fund isn't what would be considered expensive, that's a LOT of money you're saving over the years.
That seems sort of pointless. Not pushing one over the other but dividing your money makes sense when you're trying to diversify and you're not really getting that whether you're buying into one or both of those options. Seriously, run the numbers on what an extra 0.73% fee will cost you on your investment over 25 years and see if that makes sense. The Vanguard fund is a good option. If you don't want to go with that, I'd see if you have access to the Fidelity target fund someone else mentioned that had a comparable fee structure.