Vanguard FTSE All-World ex-US Index Fund Launches

[soupcxan]

As discussed previously, Vanguard's new international index fund launched yesterday. Anyone planning to jump in?

https://flagship.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0770&FundIntExt=INT

On a related note, is there any advantage to buying a "new" mutual fund rather than one that's been around for several years (accumulating undistributed capital gains that you didn't get to particpate in, but now have to pay taxes on as they are distributed)?

 

[Lusitan]

Right now, my core foreign holdings are in the Total Int'l Stock Market Index fund (VGTSX). I will have to read up on the new FTSE-based index to see what the differences are and whether I might consider that fund. Thanks for the heads up though.

 

[justin]

I might jump in at some point. Right now the ER is 0.40%, so that's a little higher than what I'm paying with VGTSX/VPACX/VEIEX/VEURX right now. Supposedly once the fund's assets grow, the ER will drop accordingly.

 

[lswswein]

Right now, my core foreign holdings are in the Total Int'l Stock Market Index fund (VGTSX). I will have to read up on the new FTSE-based index to see what the differences are and whether I might consider that fund. Thanks for the heads up though.

Compared to Ttl Intl Mkt - They added Canada and couple of other small countries. Canada is a big thing because evn though they make up about 2%+ of world GDP you were not invested in it unless you bought a candian ETF. ALso Foreign tax deduction is possible with new fund and was not allowed with the Ttl Intl Mkt - This would mean a lot of money if you have a large mount invested in taxable stuff

-h

 

[Texas Proud]

Also.. thanks for the heads up....

But, I just checked and I have a big gain in the index fund... maybe new money can go into this one... or slowly move it over as I like the industries percentages a bit better (this one has less financials and I got way too much in financials...)...

 

[Lusitan]

Compared to Ttl Intl Mkt - They added Canada and couple of other small countries. Canada is a big thing because evn though they make up about 2%+ of world GDP you were not invested in it unless you bought a candian ETF. ALso Foreign tax deduction is possible with new fund and was not allowed with the Ttl Intl Mkt - This would mean a lot of money if you have a large mount invested outside tax defered stuff

-h

Thanks for that info - yeah I remember looking into trying to get some Canadian investment exposure and not being able to with my current selection of Vanguard funds. What's the reason for the difference in the foreign tax deduction?

 

[soupcxan]

Thanks for that info - yeah I remember looking into trying to get some Canadian investment exposure and not being able to with my current selection of Vanguard funds. What's the reason for the difference in the foreign tax deduction?

VG's Total International is a "fund of funds" which do not qualify for the tax credit. The new int'l fund holds equities directly, so it does qualify.

 

[bpp]

I'm thinking about it, to consolidate my foreign holdings. Disadvantage for me is the Japan component in it, which I would prefer to hold locally, but it is a small part so may be ok. Whether I make the switch will probably depend on whether I can make use of the opportunity for gain harvesting.

 

[Alex]

I'm in it. I moved 100% of total int'l into the new fund. Once I FIRE, I plan to consolidate all of my 401k, Ira, Sep -Ira, Taxable holdings into just 4 vanguard index funds :

Total Stock Index - 40%
FTSE Ex USA Index - 20%
Reit Index - 5%
Total Bond Index - 35%

 

[citril]

I might jump in at some point. Right now the ER is 0.40%, so that's a little higher than what I'm paying with VGTSX/VPACX/VEIEX/VEURX right now. Supposedly once the fund's assets grow, the ER will drop accordingly.

I am also considering this fund but am wary of the higher ER. Does Vanguard have a history of decreasing ER's as funds grow?

 

[Spanky]

I'm in it. I moved 100% of total int'l into the new fund. Once I FIRE, I plan to consolidate all of my 401k, Ira, Sep -Ira, Taxable holdings into just 4 vanguard index funds :

Total Stock Index - 40%
FTSE Ex USA Index - 20%
Reit Index - 5%
Total Bond Index - 35%

What about Rydex S&P Equal Weight (RSP) in place of Total Stock Index?

 

[lswswein]

What about Rydex S&P Equal Weight (RSP) in place of Total Stock Index?

When consolidating, VTSMX if you end up in Admiral Shares would cost 0.09% while RSP costs 0.40%. If you want to increase your allocation to small it would be cheaper to just buy Small Value or Small Cap index fund

-h

 

[Alex]

What about Rydex S&P Equal Weight (RSP) in place of Total Stock Index?

I am a Diehard Vanguard fan - and I like the idea of everything in one fund family. Especially when the fund family is investor owned, like Vanguard. Also, I am not sold on the idea that equal weighting is better than cap weighted. Call me old fashioned.

 

[justin]

I am also considering this fund but am wary of the higher ER. Does Vanguard have a history of decreasing ER's as funds grow?

Yes, vanguard decreases ER's as fund assets grow. They have also stated this intention regarding the new FTSE international fund.

 

[Lusitan]

Yes, vanguard decreases ER's as fund assets grow. They have also stated this intention regarding the new FTSE international fund.

It's not the higher ER alone that's giving me pause, but taken along with the .25% purchase fee I'll have to consider whether getting the additional exposure to Canada is worth it. I was surprised to see that this fee applies to all purchases, not just those redeemed within X months ...

 

[lswswein]

It's not the higher ER alone that's giving me pause, but taken along with the .25% purchase fee I'll have to consider whether getting the additional exposure to Canada is worth it. I was surprised to see that this fee applies to all purchases, not just those redeemed within X months ...

But do note that the 0.25% goes to the fund not to Vanguard. So if you buy early and hold for a long time the 0.25% and the returns on it will accrue towards your returns. This is basically Vanguards way of forcing you not to buy and sell the funds even over multiple yrs. They want you to buy and hold it for a long time. This is a disadvantage if you expect to do tax loss harvesting etc.

-h

 

[lswswein]

Btw on a related Vanguard note if you own VEIEX, and want to avoid the sales fee you should do the math on getting the fund shares converted into ETF shares(costs $50) and then selling them. This would avoid the back end 0.5% fee that the fund imposes on sales.

-h
p.s: there are posts on the diehards.org forum on this subject

 

[soupcxan]

Do you know if this strategy would also work on Vanguard's Tax-Managed International (VTMGX) which has a 1% fee if redeemed within 5 years of purchase? I'd like to switch it over to the FTSE ex-US fund and would rather pay $50 than 1% of my total balance.

Btw on a related Vanguard note if you own VEIEX, and want to avoid the sales fee you should do the math on getting the fund shares converted into ETF shares(costs $50) and then selling them. This would avoid the back end 0.5% fee that the fund imposes on sales.

-h
p.s: there are posts on the diehards.org forum on this subject

 

[lswswein]

Do you know if this strategy would also work on Vanguard's Tax-Managed International (VTMGX) which has a 1% fee if redeemed within 5 years of purchase? I'd like to switch it over to the FTSE ex-US fund and would rather pay $50 than 1% of my total balance.

Unfortunately a corresponding vang ETF does not exist so you cannot do that. You will have to sell and reinvest. Or keep VTMGX around and invest new money in the FTSE ex US fund.

-h