Author Topic: VTSAX vs VTI  (Read 1343 times)

squashroll

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VTSAX vs VTI
« on: September 07, 2020, 01:02:45 PM »
VTSAX vs VTI. 
VTSAX gets mentioned quite a lot, while I do not see much about VTI.  For our intents and purposes they appear to be basically the same product. VTI has a lower expense ratio.  Why is VTSAX favored; tax advantage?

LWYRUP

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Re: VTSAX vs VTI
« Reply #1 on: September 07, 2020, 01:54:15 PM »
With a mutual fund you do not need to worry about the bid-ask spread.  You can also request purchases and withdrawals on nights and weekends, down to the penny.  Then, the professional management sorts out the details. 

The flip side is that when you put in your order, you get market price at the close.  So if you put in an order and the market goes up or down in the meantime, you get what you get and you don't get upset.

It's very administratively easy for those that don't want to time the market.  This is especially true in the withdrawal stage (I hear) as you can just put in a standing order to get $500 a week or something and it will happen like clockwork.

If anything, I think exchange traded funds might be slightly more tax efficient, but the difference is miniscule.  Exchange traded funds can also sometimes trade at discounts and premiums to NAV and have liquidity issues, but that would be very minor for a big fund like VTI.

I use VTSAX.  Mostly, I'm lazy. 

Steeze

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Re: VTSAX vs VTI
« Reply #2 on: September 07, 2020, 02:10:34 PM »
VTI is cheaper / more tax efficient / lower minimum buy-in, and for most people probably a better option.

VTSAX - main advantage is automated investing & automated withdraws. Can link to your checking account and set up recurring purchases.

I use VTSAX (and other mutual funds) for the convenience of automating my investing.

Indexer

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Re: VTSAX vs VTI
« Reply #3 on: September 07, 2020, 02:12:41 PM »
VTSAX vs VTI. 
VTSAX gets mentioned quite a lot, while I do not see much about VTI.  For our intents and purposes they appear to be basically the same product. VTI has a lower expense ratio.  Why is VTSAX favored; tax advantage?


They are different share classes of the same investment so for all intents and purposes they basically are the same product.

Differences: ETF vs Mutual fund.

Mutual funds trade at the end of the day, don't have a bid-ask spread to worry about, and allow for automatic investments(like automatic contributions).
ETFs trade nearly instantly allowing for intra-day trading, but they have a bid-ask spread to worry about.

Tax efficiency= Across most of the industry ETFs are more tax efficient than mutual funds. Vanguard is the exception to this rule, they have a patent on a process to allow the mutual funds and ETFs to work together for ideal tax efficiency. All of the share classes of Vanguard Total Stock are treated as 1 investment when tracking internal unrealized capital gains, but Vanguard can choose which fund to distribute gains out of. Instead of distributing a capital gain to VTSAX and creating a taxable event, Vanguard can distribute gains to the 401(k) version of Total stock(capital gain distributions are meaningless in a 401(k) plan), and they can use highly appreciated shares of stocks when building new ETF units(where those shares can stay for eternity). In short, VTSAX is very tax efficient, so far just as tax efficient as VTI.

Difference: VTI costs 0.01% less, but it has a bid-ask spread to worry about. The bid-ask is a problem if you trade frequently. If you plan on buying the fund and holding forever, VTI is likely better due to the lower cost.

MDM

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Re: VTSAX vs VTI
« Reply #4 on: September 07, 2020, 07:49:49 PM »
ETFs vs mutual funds - Bogleheads has some pertinent information.

MustacheAndaHalf

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Re: VTSAX vs VTI
« Reply #5 on: September 08, 2020, 01:19:25 AM »
Buying VTI at the opening price puts you 8 hours ahead of someone waiting to buy VTSAX.  Most of the time, markets go up, but either way you get more certainty with VTI.  Note since Vanguard lets you buy ETFs for $0/trade, you don't have to stick with just VTI.  There's iShares (ITOT), Schwab (SCHB) and others.


With a mutual fund you do not need to worry about the bid-ask spread.
ETFs trade nearly instantly allowing for intra-day trading, but they have a bid-ask spread to worry about.
That generic idea doesn't apply to VTI.  I've been buying and selling VTI for years, and it's bit-ask spread has always been $0.01 apart (and trades always happen in the exact middle).  If the stock price doesn't move, you can buy and sell VTI shares for exactly the same price.  If the bid-ask spread were $173.46 - $173.47, buying or selling would be for $173.465 per share, every time, in my experience.

Vanguard mutual funds only cost $0/trade at Vanguard.  If you move VTSAX shares to another brokerage, expect to pay $20-$50 per sale.  ETFs are $0/trade at most brokerages, so VTI doesn't have that problem.


squashroll

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Re: VTSAX vs VTI
« Reply #7 on: September 12, 2020, 12:36:36 PM »
Thank you, all, for the helpful replies!