Help me Complete my Vanguard 8 ETF Pie

[Fleur58]

When I read recommendations all over on line and in Kiplinger's magazine they always mention Vanguard Funds because of the slim expense ratios. FOMO! All my taxable Retirement, non Retirement money, and Roth money is at Fidelity. My Cash cushion is at Capital One. I've tried my best to use Fidelity zero index funds. Among my untaxed retirement holdings, I have large stakes in Vanguard Wellesley (VWINX) and the Vanguard Balanced Index (VBIAX), and DODIX, but Fidelity charges $75 fee each time I buy.

Recently I had intentions of starting two 529 plans with Vanguard, so I transferred $6000 there. I then changed my mind and went with 2 other state plans. Since I have not tried ETFs and the fees are low (and they cost one share as opposed to $3000 minimum for a Vanguard mutual fund except STAR) ;and I don't really need this money--I decided to use the $6000 to try a basket of 8 ETFs. I chose 6 of 8. I also set up an auto investment for $300 a month. What two sectors would you recommend that I add for added performance? I purposely did not pick the Vanguard International (VXUS) and VTI total stock market ETFs as I have plenty of that in a retirement target date fund and I chose VT instead.

VDC: Consumer Staples
VT: World Stock including US
VNQ: Real Estate
BSV: Short Term Bond (for holding cash )
BND: Bond Index
VIG: Dividend Growth
#7_____
#8____________

 

[Sunset]

Since you are so keen on Vanguard funds, why don't you open a Vanguard account for some/all of your money and save on the $75 fee ?

I use Vanguard funds inside Vanguard, outside of Vanguard I use ETF's to avoid paying the $75 fee.

Frankly, I prefer the ETF's in taxable accounts, as then I control to a larger extent, the capital gain taxability. ETF's do not surprise me with HUGE declared capital gains, upon which tax is due, unlike mutual funds.

 

[Fleur58]

Since you are so keen on Vanguard funds, why don't you open a Vanguard account for some/all of your money and save on the $75 fee ?

I use Vanguard funds inside Vanguard, outside of Vanguard I use ETF's to avoid paying the $75 fee.

Frankly, I prefer the ETF's in taxable accounts, as then I control to a larger extent, the capital gain taxability. ETF's do not surprise me with HUGE declared capital gains, upon which tax is due, unlike mutual funds.

The 2 Vanguard funds at Fidelity are in a Taxable Rollover IRA. I prefer to keep my untaxed retirement funds in one account. I can't add new money to them, I usually buy more (in large amounts) when I exchange out of other funds.
My Vanguard ETFs are in a taxable account.

Taxes are a concern, as I have other funds that generate large cap gains in my non retirement Fidelity accoiunt. I've been trying to reduce expenses, and I can't really sell out of anything at present because of the tax bill I would generate. I've already tax harvested this year and I have at least $4000 in losses. Last year I was in the 12% bracket, this year I am in the 22% bracket since I unretired and returned to work for something to do. This is why I have discretionary income--my retirement funds are adequate, home paid off, only bills I have are utility bills, insurances, and food.

 

[OldShooter]

... What two sectors would you recommend that I add for added performance? ...

You can get lots of recommendations but nobody actually knows anything useful about future performance. If they did, they would be lounging beside the pool on their private yacht or relaxing on the beach on their private tropical island. They would not be hanging around internet forums and offering free advice. They also would not be hanging around Wall Street and getting paid a pittance compared to the money they could earn on their own. IOW, your guess is as good as anyone else's.

You might want to spend a llittle time with a quilt chart to appreciate the random behavior of sectors. https://www.callan.com/periodic-table/

That said, the Fama/French three factor model identified small stocks and value stocks as persistent factors in stock value (https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp). That was the genesis of all the "factor investing" hype we've seen in the past few years. Fama and other academicians would answer your question by suggesting "the market portfolio" like VT plus small tilts towards value stocks and small stocks, maybe 5-10%. He argues that the small and value factors have persisted for a long time and will continue to persist. Personally, I am skeptical as any such advantages discovered in the past have been quickly arbitraged away as the teeming masses have started to understand them. So our portfolio is strictly VTWAX/VT with no tilt.

I haven't seen consumer staples argued for as a tilt. Is it that you think these will be less volatile/safer? After all, VT already owns all of them.

 

[Sunset]

I prefer to have multiple brokerages.
Possibly as I used to have a bank account at Washington Mutual (which went bust) and was taken over by another bank. It was a worrisome time.

In case I wasn't clear what I meant was:
You can move your accounts (roth, ira) to Vanguard "IN KIND" so everything inside each account just gets moved over. It's a non-taxable event, and avoids any $75 fee related to funds.

Then you can adjust the composition of these accounts with various vanguard funds to your hearts desire and not pay any $75 fee.
If you desire to do this, just phone Vanguard and they will help walk you through the steps.

You could do the same with your taxable regular account, but be sure it's "IN KIND" so there will be no tax on the moving.

Or stick with ETF's in the future and avoid the special fund fees.

 

[Fleur58]

I prefer to have multiple brokerages.
Possibly as I used to have a bank account at Washington Mutual (which went bust) and was taken over by another bank. It was a worrisome time.

In case I wasn't clear what I meant was:
You can move your accounts (roth, ira) to Vanguard "IN KIND" so everything inside each account just gets moved over. It's a non-taxable event, and avoids any $75 fee related to funds.

Then you can adjust the composition of these accounts with various vanguard funds to your hearts desire and not pay any $75 fee.
If you desire to do this, just phone Vanguard and they will help walk you through the steps.

You could do the same with your taxable regular account, but be sure it's "IN KIND" so there will be no tax on the moving.

Or stick with ETF's in the future and avoid the special fund fees.

Thanks for your comments.

If I sent all to Vanguard I wonder how fast I would get a phone call from my free Fidelity Advisor? I like Fidelity's far superior internet site and information and tools better than Vanguard. Zero funds...My current 403B is there too. I used to have separate accounts at Troweprice, American Century, Vanguard, and I consolidated all to Fidelity for ease of tracking and planning. But here I am starting a new account. I want to stick with ETFs for the future. I have a few good funds I am having difficulty parting with expense ratio of 0.7 I need to be comfortable with ETFs first.

 

[Fleur58]

Old Shooter, I am going to take a better look at that VT holding list and make adjustments accordingly. I am not in too deep yet with any ETF. Thanks

 

[OldShooter]

Old Shooter, I am going to take a better look at that VT holding list and make adjustments accordingly. I am not in too deep yet with any ETF. Thanks

Yeah. There is nothing wrong with a portfolio tilt, except if it is not intentional. It is fairly common here for people to post portfolios that are needlessly complicated just because they are duplicative. For example, an S&P 500 fund and a total US market fund will be almost perfectly correlated and the S&P 500 holdings in the total market fund will be about 80% of the net asset value. So why bother with two?

Once I have VTWAX or you have VT, any additional equity holdings, anywhere in the world, are guaranteed to be duplicative. So they can be there for a deliberate tilt or just because the holder wasn't paying close attention. IIRC one clever fund at Fidelity holds the total US market except the S&P. That is a nice tool if someone wants to tilt away from the US large caps.