Author Topic: Thoughts on VYM and VIG  (Read 1615 times)

RussianBear13

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Thoughts on VYM and VIG
« on: January 08, 2020, 05:37:10 AM »
Are these decent funds to add to my portfolio? Just for a little something different. I知 about 80% VTSAX and 10% BND right now. Trace amounts of a Schwab REIT in my other account.

MrUpwardlyMobile

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Re: Thoughts on VYM and VIG
« Reply #1 on: January 08, 2020, 07:28:52 AM »
I hold VYM and found it met my dividend ETF wants more than VIG.  There are a lot of varying thoughts on this but they池e bound decent looking Dividend ETFs.

I don稚 usually post links to my blog, but this is basically what I知 holding and what I知 earning.
http://upwardlymobile.life/the-q4-2019-passive-income-report/

I知 actually in the process of beefing up my VYM position trying to get it to $20k.

Xlar

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Re: Thoughts on VYM and VIG
« Reply #2 on: January 08, 2020, 02:56:19 PM »
Are these decent funds to add to my portfolio? Just for a little something different. I知 about 80% VTSAX and 10% BND right now. Trace amounts of a Schwab REIT in my other account.

Adding something to your portfolio just because it is different doesn't seem like a good rational. What goals do you have that these funds might meet? Do you have an IPS (Investment Policy Statement)? If you don't I would start by creating one: https://www.bogleheads.org/wiki/Investment_policy_statement

RussianBear13

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Re: Thoughts on VYM and VIG
« Reply #3 on: January 08, 2020, 03:56:53 PM »
Are these decent funds to add to my portfolio? Just for a little something different. I知 about 80% VTSAX and 10% BND right now. Trace amounts of a Schwab REIT in my other account.

Adding something to your portfolio just because it is different doesn't seem like a good rational. What goals do you have that these funds might meet? Do you have an IPS (Investment Policy Statement)? If you don't I would start by creating one: https://www.bogleheads.org/wiki/Investment_policy_statement
Thank you. I知 just investing for retirement. I知 early 40s and just getting started. I can max out the $6000 in my IRA and a little extra I can put in a regular brokerage account.

iwannagosouthwestusa

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Re: Thoughts on VYM and VIG
« Reply #4 on: January 08, 2020, 09:03:04 PM »
Im using the international VIGI for a good chunk or my international. 

I don稚 know a lot better but it helps me sleep better knowing that the internationals are increasing dividend payments and are actually likely growing as a result.  I also liked the country mix a bit better than standard.

MustacheAndaHalf

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Re: Thoughts on VYM and VIG
« Reply #5 on: January 09, 2020, 03:19:37 AM »
You can see how much diversification benefit you get by looking at correlations.  Portfolio Visualizer shows correlations from April 2016 (the start date for VIGI) through Dec 2019.  An example: VTI and ITOT are a complete overlap - they are 100% correlated.  You don't gain anything by adding ITOT to a portfolio that already holds VTI.

So how correlated is VYM to VTI?  About 0.95 correlation, and the same for VIG and VTI. (Again, over ~3.7 years)

If you instead went with the above poster's idea of VIGI, that is only 0.74 correlated with VTI.  They move in the same direction less often, so they're less correlated.  Similarly, VXUS and VTI are 0.78 correlated.

If you really want to pursue dividends for some reason, VIGI is better diversification than VIG.  But it's more conventional to add VXUS to form a 3-fund portfolio.

RussianBear13

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Re: Thoughts on VYM and VIG
« Reply #6 on: January 09, 2020, 06:37:24 AM »
You can see how much diversification benefit you get by looking at correlations.  Portfolio Visualizer shows correlations from April 2016 (the start date for VIGI) through Dec 2019.  An example: VTI and ITOT are a complete overlap - they are 100% correlated.  You don't gain anything by adding ITOT to a portfolio that already holds VTI.

So how correlated is VYM to VTI?  About 0.95 correlation, and the same for VIG and VTI. (Again, over ~3.7 years)

If you instead went with the above poster's idea of VIGI, that is only 0.74 correlated with VTI.  They move in the same direction less often, so they're less correlated.  Similarly, VXUS and VTI are 0.78 correlated.

If you really want to pursue dividends for some reason, VIGI is better diversification than VIG.  But it's more conventional to add VXUS to form a 3-fund portfolio.
Maybe use REITs for a little dividend action?

MustacheAndaHalf

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Re: Thoughts on VYM and VIG
« Reply #7 on: January 09, 2020, 08:34:29 PM »
Are you going to put this fund in an IRA, 401(k) or Roth?

REITs generate ordinary income, and you'll get taxed on that every year if it's in a taxable account.  REITs usually belong in an IRA, Roth, 401(k), etc.  If it will be in a retirement account, then yes REITs have a low correlation to the US stock market.  The person who made Yale Endowment famous for it's investing performance used an allocation to real estate, among other things.

RussianBear13

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Re: Thoughts on VYM and VIG
« Reply #8 on: January 14, 2020, 07:10:45 AM »
Are you going to put this fund in an IRA, 401(k) or Roth?

REITs generate ordinary income, and you'll get taxed on that every year if it's in a taxable account.  REITs usually belong in an IRA, Roth, 401(k), etc.  If it will be in a retirement account, then yes REITs have a low correlation to the US stock market.  The person who made Yale Endowment famous for it's investing performance used an allocation to real estate, among other things.

My taxable only holds VTI. I was thinking about adding 徹 to my IRA, which is mostly VTSAX. I also have some IRA money in a target date fund and 10% in BND.