Author Topic: Bond ETFs bad? VTEB vs VTEAX  (Read 249 times)

CrankAddict

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Bond ETFs bad? VTEB vs VTEAX
« on: February 19, 2020, 04:56:17 PM »
Hello,

I recently started contributing to a taxable account in addition to my maxed out 401k.  I first started with VTSAX only in the taxable account whereas my 401k is a VTSAX/VBTLX mix.  I did this because of what I read about avoiding bonds in a taxable account.  Over the 6 months that I've been doing this I've grown more uncomfortable with that AA and I'd like to add a bond component in to make it more closely mirror the 401k.  Along these lines I started looking at various Vanguard tax-exempt funds.  VTEB and VTEAX seemed appealing, but I'm confused.  When I look at Vanguard's site, it makes the ETF seem like a no-brainer because of 3 things

1)  Lower fee (0.08% vs 0.09%)
2)  Doesn't seem to be a purchase cost on the ETF but the admiral shares cost you 0.25% up front
3)  The ETF seems to be about 0.05% better on taxation of distributions and sales of shares

So great, go with the ETF, right?  But then I read stuff like this that says (for reasons I can't really grasp yet) that you should never buy an ETF with bonds in it:

https://www.whitecoatinvestor.com/why-you-should-avoid-bond-etfs/

So what's the deal?

Thanks!
Jeff
« Last Edit: February 21, 2020, 07:53:40 AM by CrankAddict »