I could be totally wrong, but don't fund prices drop when a dividend is issued to make up for the fact that the dividends that the fund has been holding from all the companies that paid dividends to the fund have been distributed so they're no longer in the fund?
The fund will also distribute long and short term capital gains on that day. Does the fund price drop for those as well? I imagine so but can't hurt to confirm.
@jhrobbin, one question I would have for you is why do you want to buy VTSAX instead of holding the target date fund? Will you also hold international investments somewhere? What about Bonds?
Here's my reasoning and I'm curious if you guys think it is sound:
At this point we have several retirement accounts: Traditional + Roth IRAs in my name and my spouse's name + 401k. I've had most of these in Target Retirement Fund which I understand it a mix of stock (US + International) and bond (US + International) funds.
I'm certainly an investing novice (though at least I've been smart enough to stick with Vanguard and Index funds), but I've always felt the percentage of International Stock in these Target Retirement funds was kind of high. For example, Vanguard Target Retirement 2035 Fund (VTTHX) is 30.90% invested in Vanguard Total International Stock Index.
I've recently been reading J L Collins' book The Simple Path to Wealth which has validated my thoughts about international investments. Luckily, much of the content from his book can be found in his blog and these posts from his Stock Series explain his reasoning. Although he clearly states the TRFs are
an excellent choice for many, maybe most people
He also states:
The TRFs all hold the Total International Stock Market Index Fund. While this is an excellent fund, I don’t feel the need for additional international coverage beyond that found in the Total Stock Market Index Fund.
Among some other reasons, explained in detail the second blog post linked below, he says that by owning VSTAX you are in effect already exposed to international investing:
With VTSAX you own ~3600 companies, virtually every publicly traded company in the USA. More to the point, the largest of these are all international businesses, many of which generate 50% or more of their sales and profits overseas.
https://jlcollinsnh.com/2012/12/18/stocks-part-xv-target-retirement-funds-the-simplest-path-to-wealth-of-all/https://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/So in conclusion, this is why I'm considering moving some of my retirement investments from Target Retirement Funds into VSTAX. By keeping some of the TRF's I will still have some true international stocks and bonds. Thoughts?