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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Grateful Stache on February 20, 2014, 08:40:28 PM

Title: Vanguard Total World Stock ETF (VT)
Post by: Grateful Stache on February 20, 2014, 08:40:28 PM

Anyone else a fan of the Vanguard Total World Stock ETF (VT)?

I know that many folks on the Boggleheads forum used to be down on it. Mostly for two reasons:

1. It had less stocks than the combined Total Stock (VTI) + International Ex-US (VEU).
2. The expense ratio was relatively high (.19%)

As for point #1, the VT fund now has a total of 5,371 stocks, which ain't too shabby. As for #2, the combined expense of VTI + VEU is .20%, which is slightly higher than the Total World.

I was thinking of making VT the core of my portfolio, with some REITS and small value stocks added for spice.

Any other lovers/haters of the Total World Stock fund?

Thanks!

 

Title: Re: Vanguard Total World Stock ETF (VT)
Post by: Mustacious on February 21, 2014, 02:12:32 AM

Hi
Total World Stock ETF = 0.19%
Total Stock = 0.05%
International Ex-US = 0.15%

You invest either 100% at 0.19%

or 50% Total and Ex-US at 0.05% and 0.15% = 0.20%/2 = 0.10%

So it is half as expensive to invest seperately.

Title: Re: Vanguard Total World Stock ETF (VT)
Post by: sherr on February 21, 2014, 10:10:14 AM

Exactly what Mustacious said.

You can't add the two expense ratios, you have to average them. If the split isn't 50/50 it would have to be a weighted average, like so:

70% US, 30% World:
70% * 0.05% + 30% * 0.15% = 0.08% expense ratio if purchased separately.

Additionally purchasing separately gives you the ability to decide how much you want invested in the US vs internationally, whereas a single "combined" ETF does not.

Title: Re: Vanguard Total World Stock ETF (VT)
Post by: Grateful Stache on February 21, 2014, 04:11:57 PM

You know, sometimes it's the simple things that trip me up.

Thanks for the math lesson, fellas. I'm going to go ahead and make the split!

Cheers!