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Equivalent Index Funds
Old 11-30-2016, 02:45 PM   #1
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Equivalent Index Funds

Based on the excellent advice from others on this forum I'm considering converting my tax-inefficient funds in my taxable account to tax efficient index funds.

What would the equivalent or recommended alternative Vanguard index funds be for:

Wellington (currently 71% of my taxable portfolio)
Wellesley (currently 17% of my taxable portfolio)
Vanguard Healthcare VGHAX (currently 12% of my taxable portfolio) - would that be VHCIX?
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Old 11-30-2016, 02:50 PM   #2
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Can you buy these inside your IRA/ 401(k) and buy something like total stock market in your taxable? I got of the Vanguard healthcare in my taxable account when it threw off a bunch of taxable dividends.
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Old 11-30-2016, 03:59 PM   #3
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Can you buy these inside your IRA/ 401(k) and buy something like total stock market in you taxable? I got of the Vanguard healthcare in my taxable account when it threw off a bunch of taxable dividends.
That's pretty much what I'm trying to do. I already have Wellington and Vanguard Healthcare in my IRA. Would like to convert my Wellington/Wellesley/Vanguard Health in my taxable portfolio into some sort of equivalent combination of index funds.

My thinking when I setup my taxable years ago was that Wellesley was my first bucket, Wellington my second bucket, and VG Healthcare my third bucket.

Now, I'd simply like to convert to an equivalent quality Bond/Equity mix with a bit of healthcare.
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Old 11-30-2016, 07:29 PM   #4
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Originally Posted by Looking4Ward View Post
That's pretty much what I'm trying to do. I already have Wellington and Vanguard Healthcare in my IRA. Would like to convert my Wellington/Wellesley/Vanguard Health in my taxable portfolio into some sort of equivalent combination of index funds.

My thinking when I setup my taxable years ago was that Wellesley was my first bucket, Wellington my second bucket, and VG Healthcare my third bucket.

Now, I'd simply like to convert to an equivalent quality Bond/Equity mix with a bit of healthcare.
To make the taxable account tax efficient, you want to get the bonds into the pre-tax accounts. Since Wellesley and Wellington have 40 to 60% bonds, I'm not sure how you reconcile that.
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Old 11-30-2016, 07:39 PM   #5
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That's what your Vanguard guy is for but it is going to be in the vicinity of 50% Total Stock, 38% Total Bond and 17% VHCIX.

Better yet, run a Portfolio Watch report on just your taxable account to see the AA of that account. Then use Portfolio Tester to make your changes using Total Stock of equities, Total Bond for fixed income and VHCIX for Health Care.

Since this is a taxable portfolio, will you be taking a big tax hit to do this repositioning?
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Old 11-30-2016, 09:56 PM   #6
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Since this is a taxable portfolio, will you be taking a big tax hit to do this repositioning?
That's what I'm trying to determine. If I do a large portion of it at the beginning of the year before dividends and CG distributions start occurring for the new year the hit might not be so bad.

So far the dividends and CG distributions have been enough to cover all of my expenses each year without having to sell any shares. And I won't have to pay any tax on them this year but it leaves no headroom for ROTH conversions.

If I convert to index funds, the taxable events will be lower or non-existent but then I'll have to sell shares to cover living expenses. I'm trying to determine the impact of that - for instance, if shares don't appreciate.
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