Author Topic: Going from VTSAX to iShares Core S&P Total U.S. Stock Market ETF (ITOT)?  (Read 6581 times)

choumiko

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I am thinking about switching from VTSAX to ITOT due to its lower expense ratio (0.03% vs 0.05% of VTSAX). Is there any downside to this switch?

forummm

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If you sell VTSAX then you would owe taxes on any gains you have. Those taxes could be more than the benefit you'd get from a (very slightly) lower expense ratio. And with ETFs you have some additional expense of paying the bid/ask spread when you buy and sell. If you were to hold it for 30 years, that's not too much to worry about. And there are the other inconveniences of EFTs (auto investment, auto reinvestment, etc). 0.02% isn't enough to motivate me to move to ETFs. But I don't think it's a terrible decision.

I wouldn't be surprised to see VTSAX's ER drop to 0.04 or 0.03 in the next year.

forummm

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Squeak825

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Out of curiosity, where are you getting those numbers from?

My charts say that ITOT had a volume on Friday of 178k, and VTI had a volume of 2.3M and SPY had 95M. Obviously ITOT is the most illiquid of the bunch (and typically has a bid-ask spread of .10, where as VTI is .01), but it is not so bad that it is only 11k shares a day.

forummm

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Out of curiosity, where are you getting those numbers from?

My charts say that ITOT had a volume on Friday of 178k, and VTI had a volume of 2.3M and SPY had 95M. Obviously ITOT is the most illiquid of the bunch (and typically has a bid-ask spread of .10, where as VTI is .01), but it is not so bad that it is only 11k shares a day.

I got it from Google Finance. Maybe they were wrong.

Another downside to ITOT over VTSAX is the commissions if you don't have free ETF trading with your broker.

Squeak825

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Out of curiosity, where are you getting those numbers from?

My charts say that ITOT had a volume on Friday of 178k, and VTI had a volume of 2.3M and SPY had 95M. Obviously ITOT is the most illiquid of the bunch (and typically has a bid-ask spread of .10, where as VTI is .01), but it is not so bad that it is only 11k shares a day.

I got it from Google Finance. Maybe they were wrong.

Another downside to ITOT over VTSAX is the commissions if you don't have free ETF trading with your broker.

Hmm...that is interesting. Google Finance has one number, iShares website has another number, and Fidelity (Where I got mine) has a third. Wonder which one is right.

forummm

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Out of curiosity, where are you getting those numbers from?

My charts say that ITOT had a volume on Friday of 178k, and VTI had a volume of 2.3M and SPY had 95M. Obviously ITOT is the most illiquid of the bunch (and typically has a bid-ask spread of .10, where as VTI is .01), but it is not so bad that it is only 11k shares a day.

I got it from Google Finance. Maybe they were wrong.

Another downside to ITOT over VTSAX is the commissions if you don't have free ETF trading with your broker.

Hmm...that is interesting. Google Finance has one number, iShares website has another number, and Fidelity (Where I got mine) has a third. Wonder which one is right.


Yeah, the Google and iShares numbers are pretty close to each other. But still not that close.

Squeak825

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Actually, now that I look at it more, the volume is very small. On Friday 11,000 shares were traded (VTI had 330k and SPY had 31 million). So you will probably have pretty large bid/ask spreads. And any large order is going to move the market. I would stay away from it until more people trade it. ETFs that aren't very liquid can also be more volatile than the underlying index.

Out of curiosity, where are you getting those numbers from?

My charts say that ITOT had a volume on Friday of 178k, and VTI had a volume of 2.3M and SPY had 95M. Obviously ITOT is the most illiquid of the bunch (and typically has a bid-ask spread of .10, where as VTI is .01), but it is not so bad that it is only 11k shares a day.

I got it from Google Finance. Maybe they were wrong.

Another downside to ITOT over VTSAX is the commissions if you don't have free ETF trading with your broker.

Hmm...that is interesting. Google Finance has one number, iShares website has another number, and Fidelity (Where I got mine) has a third. Wonder which one is right.


Yeah, the Google and iShares numbers are pretty close to each other. But still not that close.

TOS and Fidelity's numbers match. Now I am really curious....

MustacheAndaHalf

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According to iShares website, ITOT has $3,677,059,885 in assets.  Having 3.7 billion in assets should result in very small bid-ask spreads, so I would trust the much higher number.  I relied on Google Finance for years, but some of the details need fixing there (take a look at their P/E ratios, for example).

If anything, VTSAX and ITOT are almost the same thing (US total stock market, 3700 vs 3800 stock holdings).  At Vanguard, check your commission cost for buying non-Vanguard ETFs (for example, it starts at $7 / trade).
https://personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions

I would recommend you compare actual annual expenses.
For example, with $10,000 of VTSAX the annual 0.05% expense ratio works out to $5/year.  If you move it to ITOT, you'd pay $3/year.  But it probably costs you $7 to switch, so you pay $7 on the trade that takes you more than 3 years to break even.
But if you had $50,000 VTSAX, now you're looking at $25/year and the less expensive ITOT would cost $15/year.  Under that situation, you save money within the first year after the switch.

choumiko

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Thanks everyone for the feedback!

josstache

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For what it's worth, Betterment pairs SCHB with VTI for tax loss harvesting.  SCHB seems to be a bit more liquid than ITOT and also has a 0.03% expense ratio, although I agree that it's likely pointless to make any move other than for tax loss/gain harvesting purposes.

Kalergie

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Vanguard recently reduced some ETF fees such as VXUS. Chances are, VTI will follow suit. Why not wait?
Try not to be penny smart and dollar stupid.