Overlapping Mutual Funds

[Rich_by_the_Bay]

The other day I was trying to figure out how much VTSMX overlapped with NAESX. Any good tools for that purpose without getting into commercial software?

 

[larry]

Doesn't Morningstar X-ray provide that info?

 

[Rich_by_the_Bay]

Doesn't Morningstar X-ray provide that info?

Not that I can see, though it may be available with a "Premium Membership" package.

 

[LOL!]

Rich, the premium M* tools are available FREE at www.troweprice.com as long as you register for free. You do not need to be a TRP customer. Then you can easily see fund overlap.

 

[travelover]

Morningstar premium is also available through my library, for use at home - you might want to check your library's website. And yes, the X-ray does show holdings overlap as a sub-feature.

 

[Nords]

Rich, the premium M* tools are available FREE at www.troweprice.com as long as you register for free. You do not need to be a TRP customer. Then you can easily see fund overlap.

Hot dog, finally a good reason that our kid has her Roth IRA with them. Thanks, LOL!

I've been wondering how much our S&P600 small-cap ETF overlaps our other investments, and I've been particularly interested in how much our Dow Dividends ETF (DVY) overlaps the S&P500.

Even if they don't overlap that much I think it's time I considered correlations (R2).

 

[Rich_by_the_Bay]

Rich, the premium M* tools are available FREE at www.troweprice.com as long as you register for free. You do not need to be a TRP customer. Then you can easily see fund overlap.

Thanks - I did look there and confirmed that I can get in. Wasn't able to find an overlap tool, though. I'll look more later but if anyone knows where to find it, I'd appreciate it.

 

[LOL!]

Click on "Use Morningstar tools", "portfolio manager", enter a portfolio, then "portfolio x-ray" (i.e. NOT instant X-ray), then either "x-ray details" (and "stock style") or "stock intersection"

 

[mathjak107]

most of the morningstar info is outdated and sometimes months old.

as an example magellan had its entire porfolio revamped in a matter of weeks and morningstar was still 2 months behind. thats why i subscribe to a newsletter where the staff meets daily with fidelity managers to keep tabs on major changes . their model portfolios are very well layed out so as not to overlap.

 

[Rich_by_the_Bay]

Click on "Use Morningstar tools", "portfolio manager", enter a portfolio, then "portfolio x-ray" (i.e. NOT instant X-ray), then either "x-ray details" (and "stock style") or "stock intersection"

OK, I found and generated a stock intersection report. Thanks for the guidance.
It really confused me at first because I expected some overlap of VTSMX and NAESX but there was none, so the report seemed goofy. Then I ran it with VTSMX and VFINX and duplicates showed up all over the place.

Mission accomplished. I was trying to decide between [VTSMX + NAESX] or [VFINX + VEXMX], thinking the latter would have similar performance with less overlap. Not so - no overlap either pair.

 

[ats5g]

Rich,

I double checked your results with the 3/31/07 portfolio holdings of VTSMX vs. NAESX from Vanguard's website. [VFINX + VEXMX should have no overlap b/c VEXMX's index is the completion index to the S&P 500 index.]

VTSMX [3,673 stocks] + NAESX [1,708 stocks] hold 1,702 of the same stocks. These 1,702 stocks account for roughly 12% of the assets of VTSMX and 99% of the assets of NAESX. I think we can say that there is significant overlap b/w the two.

I think the M* overlap tool showed virtually no overlap because the largest holdings in VTSMX account for a large amount of the fund's assets, while the largest holdings in NAESX account for only a small amount of the fund's assets.

Personally, I think that if you're trying to have a small tilt to your portfolio, the most efficient way to do so is to start with VTSMX and then tilt with either NAESX or VISVX.

- Alec

 

[Rich_by_the_Bay]

Personally, I think that if you're trying to have a small tilt to your portfolio, the most efficient way to do so is to start with VTSMX and then tilt with either NAESX or VISVX.

Thanks, Alec. The M* analysis is very deceptive in that case. Yes, I want VTSMX exposure with just a small tilt. I skipped VISVX because I wanted to be value/growth neutral.

Can you tell me where in the Vgd web site you were able to get these overlap analyses?

 

[ats5g]

Rich,

Unfortunately, Vanguard's site doesn't have the overlap function you're looking for. So, I just copied and pasted the all the holdings of VTSMX and NAESX into Excel, and then did some "vlookup" functions. Only took 1/2 hour of cuting and pasting.

Here's the spreadsheet if you're interested: VTSMXvNAESX.xls

fyi - if this is for a taxable account you should be aware that not all the dividends from NAESX will be "qualified dividends." See Qualified dividend income—2006 year-end figures and
Qualified dividend income—2007 year-to-date estimates. However, all the dividends from the Tax Managed Small Cap fund are qualified. IIRC, most small cap indices [S&P, Russell, MSCI, etc], on which most ETF's are based, now include REITS, so some of their dividends will be non-qualified. Somehow, even though Vanguard's Tax Managed funds include REITs, all their dividends that are distributed are qualified.

- Alec

 

[Rich_by_the_Bay]

Thanks - I looked over the big spreadsheet. So even NAESX has an 11% overlap with VTSMX. Why not just go with VFINX and NAESX then, and be certain of no overlap? True you aren't quite as diversivied as VTSMX but at least you are cleanly diviided.

My goal is VTSMX with a gentle small tilt. I hope to stay neutral on value and growth.

 

[ats5g]

Thanks - I looked over the big spreadsheet. So even NAESX has an 11% overlap with VTSMX. Why not just go with VFINX and NAESX then, and be certain of no overlap? True you aren't quite as diversivied as VTSMX but at least you are cleanly diviided.

Rich,

Don't get caught in any paralysis of analysis here. Overlap isn't necessarily bad in this case. If you were using both VFINX + VTSMX, then that'd be kinda stupid overlap.

My goal is VTSMX with a gentle small tilt. I hope to stay neutral on value and growth.

If that is your goal, then just use VTSMX and tilt with either a small cap index fund/etf or a micro cap fund/etf [your choice]. While the S&P 500 index funds are IMO great funds, personally I'd rather be totally passive, and not have to deal with the S&P Committee choosing those 500 stocks for me. Also, I would want to hold the 250-350 mid cap stocks that wouldn't be in the VFINX + NAESX portfolio.

btw - I do the small/value tilt w/ VTSMX, but b/c I only have access to VFINX + a VEXMX clone, I've to to use both to create a total stock market fund with a small value tilt [w/ VISVX].

- Alec

 

[utrecht]

Im glad someone corrected the mistake because I was sitting here thinking I was an idiot. How can the "total stock market index" fund..NOT have overlap with other funds.

 

[Rich_by_the_Bay]

Rich,
If that is your goal, then just use VTSMX and tilt with either a small cap index fund/etf or a micro cap fund/etf [your choice].

Well, that completes the circle since that's exactly what I was doing, albeit without fully understanding the overlap issue. Your recommendations and perspective make good sense to me.