Author Topic: VTSAX vs VFTSX  (Read 566 times)

GreenEggs

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VTSAX vs VFTSX
« on: July 10, 2018, 05:08:28 PM »
I'm relatively new to investing, so when I started handling my dad's finances last Summer I just spent a lot of time here reading, trying to play catch up.  He'd made a lot of money, his investment choices were poor.  From general consensus here I transferred most of his assets into Vanguard and put about 70% of it into VTSAX last July. 

Anyway, I've been watching it, and a few other funds & stocks of interest, on Yahoo Finance.  I recently noticed a "sustainability" rating and saw that VTSAX isn't rated very well.  That piqued my curiosity, so I looked into ESG (environmental, social, and governance factors) funds.  That led me to the VFTSX EFT, which I compared to VTSAX.  It seems that VFTSX is slightly outperforming VTSAX, which came as a surprise. 

Have any of you noticed that? 

I realize it doesn't make sense swap the VTSAX out for VFTSX because of capital gains taxes, but I need to do something with the remaining 30% that I've been hesitant to put into a bond fund.

I guess my question is, what do you think about VFTSX? 

This may be a naive question, but does increased demand for a fund or ETF shares help raise its share price, like it would for stocks?  If so, I can see VFTSX having some marketing advantages going for it.  The "sustainability rating" label on Yahoo that attracted me, and also the low share price of $18 seem to be attractive features that could potentially drive demand for it. 

jacoavluha

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Re: VTSAX vs VFTSX
« Reply #1 on: July 10, 2018, 06:24:27 PM »
Slightly outperforming means nothing. Past performance is not an indication of future returns. It is less diversified, and more expensive to own.

I would not invest in the fund. I would consider international equities and or a bond fund for the remainder of the money

Andy R

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Re: VTSAX vs VFTSX
« Reply #2 on: July 10, 2018, 11:21:30 PM »
Any reason to put the other 30% into a similar product rather than diversifying into something like VTI, EM, REITs ?
You may want to look into diversifying into something like a 3 fund portfolio or core 4, which after deciding on the fixed interest proportion, you would be left with something like a core of VTS, VTI, and optionally smaller parts of REITs/EM/small caps/etc

Also, you should beware of a sector over performing in recent times. Over the long term prices get out of line almost constantly, sometimes above the long running average and then over correcting downwards and then over correcting back over the long running average. So it is often worse to invest in something that has done well in recent times because you end up buying high instead of low.
This is why I am glad to have VTS and VTI now, because as VTS continues to become so expensive, I'm naturally putting a higher portion of new funds into VTI to maintain the initial allocation so that when they both revert to their long running mean, I can outperform due to more money going in the one that recently under performed.

When I look at a couple of separate markets, I see that they have alternated in which outperformed over the past 10, 20, 30, and even 50+ years, so as jacoavluha said, past performance truly is no indication of future returns. Instead consider picking large markets that have have the risk/return profile you are looking for, set an allocation for each asset class, and continue adding your money to the under performer over time to naturally keep the proportions that you decided on.