Author Topic: TAX Efficiency of 'Fund of Funds'  (Read 1341 times)

stlbrah

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TAX Efficiency of 'Fund of Funds'
« on: July 15, 2016, 10:42:48 AM »
I am reading 4 Pillars of Investing, and have some confusion about this and I can't seem to find an answer.

Is there anything wrong with putting the VASGX or similar fund into a taxable account?

Obviously, there are some bonds, but besides that, the turnover doesn't appear that high. I am wondering if the blend causes more trading within the fund and raises taxes, or if there is anything else that could cause inefficiency in a taxable account. How can I find this out? I am looking at the morningstar page.


http://www.morningstar.com/funds/XNAS/VASGX/quote.html

Thanks

MDM

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Re: TAX Efficiency of 'Fund of Funds'
« Reply #1 on: July 15, 2016, 01:23:16 PM »
Is there anything wrong with putting the VASGX or similar fund into a taxable account?
Not really.  See Tax-efficient fund placement - Bogleheads, in which you can find arguments pro and con regarding bonds in taxable accounts.

See also this post and subsequent ones about Vanguard fund of funds' fees.

tj

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Re: TAX Efficiency of 'Fund of Funds'
« Reply #2 on: July 15, 2016, 01:47:06 PM »
I am reading 4 Pillars of Investing, and have some confusion about this and I can't seem to find an answer.

Is there anything wrong with putting the VASGX or similar fund into a taxable account?

Obviously, there are some bonds, but besides that, the turnover doesn't appear that high. I am wondering if the blend causes more trading within the fund and raises taxes, or if there is anything else that could cause inefficiency in a taxable account. How can I find this out? I am looking at the morningstar page.


http://www.morningstar.com/funds/XNAS/VASGX/quote.html

Thanks

How much do you have invested? I'd say it's pretty negligble if you don't have well into six figures. You'll probably come out ahead by sticking with the fund and not being tempted to tinker with your investmetnts.

stlbrah

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Re: TAX Efficiency of 'Fund of Funds'
« Reply #3 on: July 15, 2016, 05:04:26 PM »
Thanks for the replies.

I actually don't have this fund in a taxable account at this time. I am just doing some research.