Automating VT with VTI/VEA/VWO?

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hiddenpower
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Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
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Re: Automating VT with VTI/VEA/VWO?

Post by arcticpineapplecorp. »

hiddenpower wrote: Wed May 31, 2023 11:46 am Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
first i'd keep it simpler and do VTI/VXUS instead of the three funds you have. Then you can simply do whatever combo of total US and total International you wish.

Beauty of that is whatever percentage you want, say 60/40 US/INT then for every $100 you invest, you simply put $60 into VTI and $40 into VXUS every paycheck.

what's FTC? Federal Trade Commission?
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Re: Automating VT with VTI/VEA/VWO?

Post by sycamore »

Step 1: be satisfied with approximating VT, not matching it exactly.

Step 2: consult some web pages on relative weights:
a) The portfolio composition of Vanguard Total World Stock ETF VT is is 59% US. Round up to 60%.

b) https://www.bogleheads.org/wiki/Approxi ... ock_market says 75% VEA, 25% VWO approximates VXUS. This is corroborated by the portfolio composition of Vanguard Total International Stock ETF VXUS.

Step 3: tell your broker you want to 60% of your dollars to buy VTI, (40 x 25%)= 10% to VWO, and 30% in VEA.

Step 4: once a year, consult the above references to determine the latest weightings. If any of them are off by a significant amount (e.g., VWO is only 5% instead of 10%, or VEA is only 25% instead of 30%), then adjust how much you buy each week by enough to get back to weighting over the course of a year.

If at any point you're worried about not matching VT closely enough, check your actual performance relative to VT. It's very likely the performance is rather close, as AA differences of only a few percentage points aren't usually enough to affect performance much.
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Re: Automating VT with VTI/VEA/VWO?

Post by aj76er »

I track the weightings of VT in our taxable account with VTI+VXUS. Most if the time I just let the ratio float and then true up with new contributions and/or dividends a few times a year. You will not be able to tell much difference within a few % of actual market cap. To see this, use portfoliovisualizer to backtest a few different combinations (eg 61/39, 59/41, etc) and you will see near perfect overlap.

In other words, be aware of false precision. When I started tracking my portfolio, I used to round to two decimal places, which is completely overkill considering that stock indices can move more than 5% in any given day :).
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

arcticpineapplecorp. wrote: Wed May 31, 2023 1:16 pm first i'd keep it simpler and do VTI/VXUS instead of the three funds you have. Then you can simply do whatever combo of total US and total International you wish.

Beauty of that is whatever percentage you want, say 60/40 US/INT then for every $100 you invest, you simply put $60 into VTI and $40 into VXUS every paycheck.

what's FTC? Federal Trade Commission?
Thanks! FTC = foreign tax credit. 60/40 would be fixed, whereas I was thinking of following the moving world market cap weight. As for VXUS vs VTI, it seems like splitting VXUS gets another 2bps, and future optionality to potentially adjust and under/overweight emerging etc.
sycamore wrote: Wed May 31, 2023 1:19 pm Step 1: be satisfied with approximating VT, not matching it exactly.

Step 2: consult some web pages on relative weights:
a) The portfolio composition of Vanguard Total World Stock ETF VT is is 59% US. Round up to 60%.

b) https://www.bogleheads.org/wiki/Approxi ... ock_market says 75% VEA, 25% VWO approximates VXUS. This is corroborated by the portfolio composition of Vanguard Total International Stock ETF VXUS.

Step 3: tell your broker you want to 60% of your dollars to buy VTI, (40 x 25%)= 10% to VWO, and 30% in VEA.

Step 4: once a year, consult the above references to determine the latest weightings. If any of them are off by a significant amount (e.g., VWO is only 5% instead of 10%, or VEA is only 25% instead of 30%), then adjust how much you buy each week by enough to get back to weighting over the course of a year.

If at any point you're worried about not matching VT closely enough, check your actual performance relative to VT. It's very likely the performance is rather close, as AA differences of only a few percentage points aren't usually enough to affect performance much.
So basically, don't let perfect be the enemy of good enough, and its better lock in a sure thing such as the foreign tax credit with a little complexity even if the exact allocation drifts some?
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Re: Automating VT with VTI/VEA/VWO?

Post by arcticpineapplecorp. »

hiddenpower wrote: Wed May 31, 2023 4:09 pm
arcticpineapplecorp. wrote: Wed May 31, 2023 1:16 pm first i'd keep it simpler and do VTI/VXUS instead of the three funds you have. Then you can simply do whatever combo of total US and total International you wish.

Beauty of that is whatever percentage you want, say 60/40 US/INT then for every $100 you invest, you simply put $60 into VTI and $40 into VXUS every paycheck.

what's FTC? Federal Trade Commission?
Thanks! FTC = foreign tax credit. 60/40 would be fixed, whereas I was thinking of following the moving world market cap weight. As for VXUS vs VTI, it seems like splitting VXUS gets another 2bps, and future optionality to potentially adjust and under/overweight emerging etc.
sycamore wrote: Wed May 31, 2023 1:19 pm Step 1: be satisfied with approximating VT, not matching it exactly.

Step 2: consult some web pages on relative weights:
a) The portfolio composition of Vanguard Total World Stock ETF VT is is 59% US. Round up to 60%.

b) https://www.bogleheads.org/wiki/Approxi ... ock_market says 75% VEA, 25% VWO approximates VXUS. This is corroborated by the portfolio composition of Vanguard Total International Stock ETF VXUS.

Step 3: tell your broker you want to 60% of your dollars to buy VTI, (40 x 25%)= 10% to VWO, and 30% in VEA.

Step 4: once a year, consult the above references to determine the latest weightings. If any of them are off by a significant amount (e.g., VWO is only 5% instead of 10%, or VEA is only 25% instead of 30%), then adjust how much you buy each week by enough to get back to weighting over the course of a year.

If at any point you're worried about not matching VT closely enough, check your actual performance relative to VT. It's very likely the performance is rather close, as AA differences of only a few percentage points aren't usually enough to affect performance much.
So basically, don't let perfect be the enemy of good enough, and its better lock in a sure thing such as the foreign tax credit with a little complexity even if the exact allocation drifts some?
Vxus is the etf for total international. If emerging market percentage of total int changes it will be automatically reflected in vxus. You're complicating by having 3 funds. Is 2bps going to really make a difference?

I see owning vxus costing .07% vs owning vea (24%) and vwo (76%) = .0572%. That's a difference of 0.0128% per year. Less than 2 bps. Closer to 1 bp. Is that worth the extra effort of rebalancing 3 funds instead of 2?
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Re: Automating VT with VTI/VEA/VWO?

Post by rkhusky »

If you want to match VT and start with the market allocations to VTI/VXUS, no further adjustments/rebalancing are needed, as long as your contributions match the current market allocation. The same with the 3-fund portfolio.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

arcticpineapplecorp. wrote: Wed May 31, 2023 5:23 pm Vxus is the etf for total international. If emerging market percentage of total int changes it will be automatically reflected in vxus. You're complicating by having 3 funds. Is 2bps going to really make a difference?

I see owning vxus costing .07% vs owning vea (24%) and vwo (76%) = .0572%. That's a difference of 0.0128% per year. Less than 2 bps. Closer to 1 bp. Is that worth the extra effort of rebalancing 3 funds instead of 2?
Yeah. It gives me some flexibility. If developed crashes, then I can sin a little and tilt a bit higher. Same goes for potentially overweighting emerging as one learns more through accumulation, or potentially selling out of emerging earlier towards retirement and shifting it to tax advantaged due to the higher yields. I think optionality is nice. It also gives more TLH opportunities if one is into that (personally I'm not at this time)
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

rkhusky wrote: Wed May 31, 2023 6:04 pm If you want to match VT and start with the market allocations to VTI/VXUS, no further adjustments/rebalancing are needed, as long as your contributions match the current market allocation. The same with the 3-fund portfolio.
Just to be clear the issue I was referencing is how to keep DCA-ing into that ratio, given most autoinvesting tools aren't capable of matching the ratio each month.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

Does anyone know how this data was pulled in google sheets? https://docs.google.com/spreadsheets/d/ ... _/pubhtml#

It has the split for VTI / VXUS. Ideally I can grab VEA and VWO too.
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Re: Automating VT with VTI/VEA/VWO?

Post by Raspberry-503 »

lookup GOOGLEFINANCE https://blog.sheetgo.com/google-sheets- ... le-sheets/
https://www.google.com/finance/ can help you figure out the ticker name used by the function above
The MktCaps tab in the spreadsheet you link shows the indexes used.

Once you have the market cap for each index, you can figure out the ratios

Interestingly I can't seem to access the actual indexes in excel. If I compare market caps of VTI/VEA/VWO I get 61/24/15 which seems to come out close enough but is not technically correct since they are the market cap of funds, not indexes
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

Raspberry-503 wrote: Fri Jun 02, 2023 3:27 pm lookup GOOGLEFINANCE https://blog.sheetgo.com/google-sheets- ... le-sheets/
https://www.google.com/finance/ can help you figure out the ticker name used by the function above
The MktCaps tab in the spreadsheet you link shows the indexes used.

Once you have the market cap for each index, you can figure out the ratios

Interestingly I can't seem to access the actual indexes in excel. If I compare market caps of VTI/VEA/VWO I get 61/24/15 which seems to come out close enough but is not technically correct since they are the market cap of funds, not indexes
I don't think one should use the market caps but instead try to find the FTSE index and use the price, then set a ratio equivalent to VT so it drifts close enough. Does an index for each of these exist? Using the price of the underlying etf could work except that they split, so I guess another way is using a dollar amount.
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Re: Automating VT with VTI/VEA/VWO?

Post by Raspberry-503 »

yeah actually I think there is no marketprice associated with indexes in GOOGLEFINANCE
I can retrieve =GOOGLEFINANCE("INDEXSP:.INX", "price") but =GOOGLEFINANCE("INDEXSP:.INX", "marketcap") gives me an error that this value is not available for the symbol selected
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Re: Automating VT with VTI/VEA/VWO?

Post by Raspberry-503 »

hmmm, I couldn't find a solution to calculate it automatically and reliably (not that I care to do so but it was an interesting challenge)
probably the fastest way is to look it up on the Vanguard web site: https://investor.vanguard.com/investmen ... omposition

This made me wonder how often the ratio changes significantly (+-5%?) and I found https://www.visualcapitalist.com/global ... al%20total.

Image

According to this the US is only 42% of global stocks, so why is VT 62% North America?
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Re: Automating VT with VTI/VEA/VWO?

Post by AspirationalBH »

hiddenpower wrote: Fri Jun 02, 2023 2:32 pm
Just to be clear the issue I was referencing is how to keep DCA-ing into that ratio, given most autoinvesting tools aren't capable of matching the ratio each month.
M1Finance does this with asset allocation pies where you set percentages and then setup auto-investing in dollars. If you're not tied to your current broker, this would be an option as you said you want to change allocations. In the future, adjust the percentages and continue auto-investing.
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Re: Automating VT with VTI/VEA/VWO?

Post by Trance »

hiddenpower wrote: Wed May 31, 2023 11:46 am Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
Be warned about the dangers of performance chasing. It's tempting to want to hold only American stocks and not as much or any international. And the same can be said of VWO. The emerging markets are quite volatile and you have to be willing to not sell because of underperformance and take a loss.
60% VT 40% BNDW (no bonds in Roth)
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Re: Automating VT with VTI/VEA/VWO?

Post by BabaWawa »

arcticpineapplecorp. wrote: Wed May 31, 2023 5:23 pm
hiddenpower wrote: Wed May 31, 2023 4:09 pm
arcticpineapplecorp. wrote: Wed May 31, 2023 1:16 pm first i'd keep it simpler and do VTI/VXUS instead of the three funds you have. Then you can simply do whatever combo of total US and total International you wish.

Beauty of that is whatever percentage you want, say 60/40 US/INT then for every $100 you invest, you simply put $60 into VTI and $40 into VXUS every paycheck.

what's FTC? Federal Trade Commission?
Thanks! FTC = foreign tax credit. 60/40 would be fixed, whereas I was thinking of following the moving world market cap weight. As for VXUS vs VTI, it seems like splitting VXUS gets another 2bps, and future optionality to potentially adjust and under/overweight emerging etc.
sycamore wrote: Wed May 31, 2023 1:19 pm Step 1: be satisfied with approximating VT, not matching it exactly.

Step 2: consult some web pages on relative weights:
a) The portfolio composition of Vanguard Total World Stock ETF VT is is 59% US. Round up to 60%.

b) https://www.bogleheads.org/wiki/Approxi ... ock_market says 75% VEA, 25% VWO approximates VXUS. This is corroborated by the portfolio composition of Vanguard Total International Stock ETF VXUS.

Step 3: tell your broker you want to 60% of your dollars to buy VTI, (40 x 25%)= 10% to VWO, and 30% in VEA.

Step 4: once a year, consult the above references to determine the latest weightings. If any of them are off by a significant amount (e.g., VWO is only 5% instead of 10%, or VEA is only 25% instead of 30%), then adjust how much you buy each week by enough to get back to weighting over the course of a year.

If at any point you're worried about not matching VT closely enough, check your actual performance relative to VT. It's very likely the performance is rather close, as AA differences of only a few percentage points aren't usually enough to affect performance much.
So basically, don't let perfect be the enemy of good enough, and its better lock in a sure thing such as the foreign tax credit with a little complexity even if the exact allocation drifts some?
Vxus is the etf for total international. If emerging market percentage of total int changes it will be automatically reflected in vxus. You're complicating by having 3 funds. Is 2bps going to really make a difference?

I see owning vxus costing .07% vs owning vea (24%) and vwo (76%) = .0572%. That's a difference of 0.0128% per year. Less than 2 bps. Closer to 1 bp. Is that worth the extra effort of rebalancing 3 funds instead of 2?
I would ask is 3 funds really more complicated than two? This is a pretty talented group here, one extra fund is child's play and certainly worth any cost savings. And if China is not your cup of tea (1/3 of emerging markets), the a separate allocation to VWO allows you to dial it back to where you're comfortable.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

BabaWawa wrote: Sat Jun 03, 2023 7:46 pm I would ask is 3 funds really more complicated than two? This is a pretty talented group here, one extra fund is child's play and certainly worth any cost savings. And if China is not your cup of tea (1/3 of emerging markets), the a separate allocation to VWO allows you to dial it back to where you're comfortable.
yeah honestly i'm quite confused with the replies here. if developed ex-us crashes 30%, how bad is it really to put a bit extra into this asset under the impression that it mean reverts? It seems like a no-brainer way to be in control of your world allocation without being able to screw it up too much :D
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

hiddenpower wrote: Wed May 31, 2023 11:46 am Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
This sounds like the perfect scenario where one could benefit from a robo advisor. Vanguard Digital Advisor (0.15% expense ratio inclusive of fund fees) and Betterment (closer to 0.30%) are two good options that come to mind.

They're automatic, and take care of the rebalancing for you — and they use more or less the same ETFs you mentioned so they're flexible for your purposes.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

CarefullyCarele$$ wrote: Sat Jun 03, 2023 11:59 pm
hiddenpower wrote: Wed May 31, 2023 11:46 am Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
This sounds like the perfect scenario where one could benefit from a robo advisor. Vanguard Digital Advisor (0.15% expense ratio inclusive of fund fees) and Betterment (closer to 0.30%) are two good options that come to mind.

They're automatic, and take care of the rebalancing for you — and they use more or less the same ETFs you mentioned so they're flexible for your purposes.
Haha that’s the opposite of control. Honestly I hope no one on bogleheads ever uses a roboadvisor and pays that fee.
Last edited by hiddenpower on Sun Jun 04, 2023 10:04 am, edited 1 time in total.
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Re: Automating VT with VTI/VEA/VWO?

Post by 000 »

Obviously current holdings, once invested, will mostly* implicitly track with market cap shifts.

But for new contributions, you will need to get the ratios from somewhere and input them into your broker somewhere. I'm not aware of any easy way to automate this. Fortunately market cap ratios don't change much quickly, so the approach suggested by sycamore is what I would do.

* Dividends and index reconstitutions are the exception.
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

hiddenpower wrote: Sun Jun 04, 2023 12:06 am
CarefullyCarele$$ wrote: Sat Jun 03, 2023 11:59 pm
hiddenpower wrote: Wed May 31, 2023 11:46 am Sounds like this combo (VTI/VEA/VWO) will give the most control and flexibility down the line with FTC and potential tilts as my investment journey shifts. However I'd like to begin with matching VT. I have a broker that allows dripping in a fixed dollar figure into each asset weekly, which gets me part of the way there but will obviously trail when the weights shift. Does anyone have easy auto or pseudo-automated solutions to this?
This sounds like the perfect scenario where one could benefit from a robo advisor. Vanguard Digital Advisor (0.15% expense ratio inclusive of fund fees) and Betterment (closer to 0.30%) are two good options that come to mind.

They're automatic, and take care of the rebalancing for you — and they use more or less the same ETFs you mentioned so they're flexible for your purposes.
Haha that’s the opposite of control. Honestly I hope no on bogleheads ever uses a roboadvisor and pays that fee.
I'm curious why you'd say that. Vanguard's robo advisor costs just 0.15% INCLUSIVE of fund expenses (which is only 0.07% more than their target date index funds) — and they seem a great fit for your purposes.

In my opinion, Vanguard Digital Advisor is a great default suggestion for almost anyone. For a minuscule extra fee — they put you in a classic Boglehead portfolio and manage it for you, handling rebalancing tax-efficiently, taking asset location into account, utilising tax-loss harvesting and tax-exempt bonds based on one's bracket, really the whole deal. Absolutely hands-off management of this sort does wonders against behavioural pitfalls. And they put you in ETFs so you can switch out to DIYing at any time (you can disable TLH if you wish to remain in the same funds).

The paranoia against robo advisors on this forum is really surprising. In my opinion, they should be embraced for taxable accounts the same way TDIFs have been embraced for tax-deferred accounts (at least the few good, cost-efficient ones anyway).
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Re: Automating VT with VTI/VEA/VWO?

Post by 000 »

CarefullyCarele$$ wrote: Sun Jun 04, 2023 12:25 am I'm curious why you'd say that. Vanguard's robo advisor costs just 0.15% INCLUSIVE of fund expenses (which is only 0.07% more than their target date index funds) — and they seem a great fit for your purposes.

In my opinion, Vanguard Digital Advisor is a great default suggestion for almost anyone. For a minuscule extra fee — they put you in a classic Boglehead portfolio and manage it for you, handling rebalancing tax-efficiently, taking asset location into account, utilising tax-loss harvesting and tax-exempt bonds based on one's bracket, really the whole deal. Absolutely hands-off management of this sort does wonders against behavioural pitfalls. And they put you in ETFs so you can switch out to DIYing at any time (you can disable TLH if you wish to remain in the same funds).

The paranoia against robo advisors on this forum is really surprising. In my opinion, they should be embraced for taxable accounts the same way TDIFs have been embraced for tax-deferred accounts (at least the few good, cost-efficient ones anyway).
Looks like Vanguard index robo is up to 0.20%. https://investor.vanguard.com/advice/robo-advisor

None of their options have any TIPS bonds.

Of note, their active/index option gets access to Capital Opportunity.
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

000 wrote: Sun Jun 04, 2023 12:35 am
CarefullyCarele$$ wrote: Sun Jun 04, 2023 12:25 am I'm curious why you'd say that. Vanguard's robo advisor costs just 0.15% INCLUSIVE of fund expenses (which is only 0.07% more than their target date index funds) — and they seem a great fit for your purposes.

In my opinion, Vanguard Digital Advisor is a great default suggestion for almost anyone. For a minuscule extra fee — they put you in a classic Boglehead portfolio and manage it for you, handling rebalancing tax-efficiently, taking asset location into account, utilising tax-loss harvesting and tax-exempt bonds based on one's bracket, really the whole deal. Absolutely hands-off management of this sort does wonders against behavioural pitfalls. And they put you in ETFs so you can switch out to DIYing at any time (you can disable TLH if you wish to remain in the same funds).

The paranoia against robo advisors on this forum is really surprising. In my opinion, they should be embraced for taxable accounts the same way TDIFs have been embraced for tax-deferred accounts (at least the few good, cost-efficient ones anyway).
Looks like Vanguard index robo is up to 0.20%. https://investor.vanguard.com/advice/robo-advisor

None of their options have any TIPS bonds.

Of note, their active/index option gets access to Capital Opportunity.
If you go to the "Calculate cost for advice" section and input an amount, it'll tell you how they credit Vanguard ETF expenses back to your account.

And I'm not sure what you meant, but an all-index option is readily available. They have active options for those who seek it — just as they've always had as part of their mutual fund offerings.
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Re: Automating VT with VTI/VEA/VWO?

Post by 000 »

CarefullyCarele$$ wrote: Sun Jun 04, 2023 12:39 am If you go to the "Calculate cost for advice" section and input an amount, it'll tell you how they credit Vanguard ETF expenses back to your account.

And I'm not sure what you meant, but an all-index option is readily available. They have active options for those who seek it — just as they've always had as part of their mutual fund offerings.
No, it still costs 0.20% in total. I pay 0.20% for advisory fees. I pay 0.05% indirectly in fund ERs. I receive a credit worth 0.05% for the fund ERs.

0.20% + 0.05% - 0.05% = 0.20% all inclusive.

They aren't giving a waiver AND a credit for the fund ERs.

I was merely noting that the active option gets access to a closed fund desired by many investors.
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

000 wrote: Sun Jun 04, 2023 12:47 am
CarefullyCarele$$ wrote: Sun Jun 04, 2023 12:39 am If you go to the "Calculate cost for advice" section and input an amount, it'll tell you how they credit Vanguard ETF expenses back to your account.

And I'm not sure what you meant, but an all-index option is readily available. They have active options for those who seek it — just as they've always had as part of their mutual fund offerings.
No, it still costs 0.20% in total. I pay 0.20% for advisory fees. I pay 0.05% indirectly in fund ERs. I receive a credit worth 0.05% for the fund ERs.

0.20% + 0.05% - 0.05% = 0.20% all inclusive.

They aren't giving a waiver AND a credit for the fund ERs.

I was merely noting that the active option gets access to a closed fund desired by many investors.
Ah, I see — strange how they've worded it as "the most you'll pay is 0.20%" if that's a fixed fee and it can't go lower than that. But thank you, appreciate you clarifying.
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Re: Automating VT with VTI/VEA/VWO?

Post by steve r »

rkhusky wrote: Wed May 31, 2023 6:04 pm If you want to match VT and start with the market allocations to VTI/VXUS, no further adjustments/rebalancing are needed, as long as your contributions match the current market allocation. The same with the 3-fund portfolio.
This approach would clearly capture price swings.

But market cap is also impacted by new share issuance and listings / delistings. TSLA, for example, adds to the U.S. market cap, but if you set your VTI / VXUS positions just before they were listed, things would be a little off.
"Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. ..Don't look for the needle in the haystack. Just buy the haystack." Jack Bogle
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

CarefullyCarele$$ wrote: Sun Jun 04, 2023 12:25 am
hiddenpower wrote: Sun Jun 04, 2023 12:06 am
CarefullyCarele$$ wrote: Sat Jun 03, 2023 11:59 pm This sounds like the perfect scenario where one could benefit from a robo advisor.
Haha that’s the opposite of control. Honestly I hope no on bogleheads ever uses a roboadvisor and pays that fee.
I'm curious why you'd say that. Vanguard's robo advisor costs just 0.15% INCLUSIVE of fund expenses (which is only 0.07% more than their target date index funds) — and they seem a great fit for your purposes.

In my opinion, Vanguard Digital Advisor is a great default suggestion for almost anyone. For a minuscule extra fee — they put you in a classic Boglehead portfolio and manage it for you, handling rebalancing tax-efficiently, taking asset location into account, utilising tax-loss harvesting and tax-exempt bonds based on one's bracket, really the whole deal. Absolutely hands-off management of this sort does wonders against behavioural pitfalls. And they put you in ETFs so you can switch out to DIYing at any time (you can disable TLH if you wish to remain in the same funds).

The paranoia against robo advisors on this forum is really surprising. In my opinion, they should be embraced for taxable accounts the same way TDIFs have been embraced for tax-deferred accounts (at least the few good, cost-efficient ones anyway).
It's fine if it really helps someone out, but then you might as well just buy VT and get the lack of a ftc. I would worry that a roboadvisor ends up with 6+ funds in a taxable account. That's cool that they handle tax loss harvesting for you.

By having a bit more control fo your investments you can make small tweaks when extraordinary events happen, for example if developed ex-US goes down the hardest, it may be reasonable to overweight that slice with new contributions under the belief of mean reversion. Nothing crazy to stray from the path but small opportunities like that should arise.
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

hiddenpower wrote: Sun Jun 04, 2023 10:17 am It's fine if it really helps someone out, but then you might as well just buy VT and get the lack of a ftc. I would worry that a roboadvisor ends up with 6+ funds in a taxable account. That's cool that they handle tax loss harvesting for you.

By having a bit more control fo your investments you can make small tweaks when extraordinary events happen, for example if developed ex-US goes down the hardest, it may be reasonable to overweight that slice with new contributions under the belief of mean reversion. Nothing crazy to stray from the path but small opportunities like that should arise.
Fair point, though I myself (and I'm sure many others) appreciate the set-it-and-forget-it approach of Vanguard's robo (which I would aptly describe as a TDIF minus its taxable concerns). The automated TLH is definitely a nice icing on the cake. :)
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

CarefullyCarele$$ wrote: Sun Jun 04, 2023 10:44 am
hiddenpower wrote: Sun Jun 04, 2023 10:17 am It's fine if it really helps someone out, but then you might as well just buy VT and get the lack of a ftc. I would worry that a roboadvisor ends up with 6+ funds in a taxable account. That's cool that they handle tax loss harvesting for you.

By having a bit more control fo your investments you can make small tweaks when extraordinary events happen, for example if developed ex-US goes down the hardest, it may be reasonable to overweight that slice with new contributions under the belief of mean reversion. Nothing crazy to stray from the path but small opportunities like that should arise.
Fair point, though I myself (and I'm sure many others) appreciate the set-it-and-forget-it approach of Vanguard's robo (which I would aptly describe as a TDIF minus its taxable concerns). The automated TLH is definitely a nice icing on the cake. :)
Out of curiosity, what holdings does the roboadvisor end up with? Is it weighting everything at MCWs matching VT or is it tilted in some other direction?
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

hiddenpower wrote: Sun Jun 04, 2023 10:50 am
CarefullyCarele$$ wrote: Sun Jun 04, 2023 10:44 am
hiddenpower wrote: Sun Jun 04, 2023 10:17 am It's fine if it really helps someone out, but then you might as well just buy VT and get the lack of a ftc. I would worry that a roboadvisor ends up with 6+ funds in a taxable account. That's cool that they handle tax loss harvesting for you.

By having a bit more control fo your investments you can make small tweaks when extraordinary events happen, for example if developed ex-US goes down the hardest, it may be reasonable to overweight that slice with new contributions under the belief of mean reversion. Nothing crazy to stray from the path but small opportunities like that should arise.
Fair point, though I myself (and I'm sure many others) appreciate the set-it-and-forget-it approach of Vanguard's robo (which I would aptly describe as a TDIF minus its taxable concerns). The automated TLH is definitely a nice icing on the cake. :)
Out of curiosity, what holdings does the roboadvisor end up with? Is it weighting everything at MCWs matching VT or is it tilted in some other direction?
It puts you in a classic Boglehead portfolio, same as Vanguard's target date index funds. The weighting is 60% US stocks and 40% ex-US stocks, which is Vanguard's universal recommendation that they seem to follow in all their funds.

Generally VTI, VXUS, BND, BNDX. If you're in a higher tax bracket (you enter your income during onboarding), it replaces the bond portion with VTEB. If you connect a tax-advantaged account as well, it'll prioritise placing bonds in them instead.

And I think for TLH (if you opt into it), it uses VOO and VEA/VWO or VEU.
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Re: Automating VT with VTI/VEA/VWO?

Post by sycamore »

CarefullyCarele$$ wrote: Sun Jun 04, 2023 10:58 am
hiddenpower wrote: Sun Jun 04, 2023 10:50 am
CarefullyCarele$$ wrote: Sun Jun 04, 2023 10:44 am
hiddenpower wrote: Sun Jun 04, 2023 10:17 am It's fine if it really helps someone out, but then you might as well just buy VT and get the lack of a ftc. I would worry that a roboadvisor ends up with 6+ funds in a taxable account. That's cool that they handle tax loss harvesting for you.

By having a bit more control fo your investments you can make small tweaks when extraordinary events happen, for example if developed ex-US goes down the hardest, it may be reasonable to overweight that slice with new contributions under the belief of mean reversion. Nothing crazy to stray from the path but small opportunities like that should arise.
Fair point, though I myself (and I'm sure many others) appreciate the set-it-and-forget-it approach of Vanguard's robo (which I would aptly describe as a TDIF minus its taxable concerns). The automated TLH is definitely a nice icing on the cake. :)
Out of curiosity, what holdings does the roboadvisor end up with? Is it weighting everything at MCWs matching VT or is it tilted in some other direction?
It puts you in a classic Boglehead portfolio, same as Vanguard's target date index funds. The weighting is 60% US stocks and 40% ex-US stocks, which is Vanguard's universal recommendation that they seem to follow in all their funds.

Generally VTI, VXUS, BND, BNDX. If you're in a higher tax bracket (you enter your income during onboarding), it replaces the bond portion with VTEB. If you connect a tax-advantaged account as well, it'll prioritise placing bonds in them instead.

And I think for TLH (if you opt into it), it uses VOO and VEA/VWO or VEU.
A couple minor notes:

We sometimes hear[/url] of Vanguard PAS clients whose US/ex-US stock allocation is not 60/40. But it's not always clear why. Maybe a portion of the client's portfolio is not managed by PAS, or maybe PAS and/or the client requested a different allocation. There's a recent thread (viewtopic.php?t=405597) about an article that discusses it more. Not sure if we've heard similar things about Vanguard Digital Advisor clients - maybe portfolio allocation really is more "robotic" with a robo advisor?


Also, Vanguard has not always used a 60/40 US/ex-US stock allocation. They last switched in 2015, see https://www.bogleheads.org/wiki/Vanguar ... ds#History. They may very well switch again.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

Interesting.

Does anyone know where I can pull the US / EX-US developed / emerging into a google sheet? I found a reference on bogleheads earlier that pulled it from morningstar, but it seems like this method has been nixed since the tables are generated dynamically in javascript now instead of server-side.

Honestly this should be a pretty simple thing to automate even programmatically with alpaca if the data is accessible. But checking once a year, as sycamore mentioned, should also do the trick.
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Re: Automating VT with VTI/VEA/VWO?

Post by CarefullyCarele$$ »

sycamore wrote: Sun Jun 04, 2023 11:55 am A couple minor notes:

We sometimes hear[/url] of Vanguard PAS clients whose US/ex-US stock allocation is not 60/40. But it's not always clear why. Maybe a portion of the client's portfolio is not managed by PAS, or maybe PAS and/or the client requested a different allocation. There's a recent thread (viewtopic.php?t=405597) about an article that discusses it more. Not sure if we've heard similar things about Vanguard Digital Advisor clients - maybe portfolio allocation really is more "robotic" with a robo advisor?


Also, Vanguard has not always used a 60/40 US/ex-US stock allocation. They last switched in 2015, see https://www.bogleheads.org/wiki/Vanguar ... ds#History. They may very well switch again.
Appreciate the insight — I wonder if PAS clients can still always request to maintain a 60/40 allocation since it's more customisable? I suppose the lack of a "human" advisor is probably the reason Vanguard Digital Advisor sticks to Vanguard's topline defaults.
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

Another thought. Is tax loss harvesting going to be much more advantageous with mores funds such as VTI/VEA/VWO (ITOT/IDEV/IEMG) versus VTI/VXUS (ITOT/IXUS)? It seems I cannot set up automated investing with IDEV/IEMG.

And do people usually only do TLH-ing at the very end of the year, in order to avoid switching to a fund that will emit a dividend within 30 days (where it would then be 100% nonqualified)?
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Re: Automating VT with VTI/VEA/VWO?

Post by SwissCup »

Raspberry-503 wrote: Fri Jun 02, 2023 4:39 pm
According to this the US is only 42% of global stocks, so why is VT 62% North America?
+1
Chinese Shares are not (yet) fully reflected in Indices (think they currently are at 20% of market weight only. And Frontier Markets may be another 1, 2 %. But still - why is there such a big gap?
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Re: Automating VT with VTI/VEA/VWO?

Post by Jmc1260 »

Another consideration for vti/Vea/vwo vs vti/Vxus or all Vt beyond increased TLH opportunities is a slight (but real) advantage to tax efficient placement assuming you have both taxable and tax advantaged space available to invest. Emerging markets, for example, throw off substantial non-qualified dividends not recaptured by a FTC which can be avoided by placing EM stocks in tax advantaged space. This is likely more meaningful than the 1 bp of ER cost savings depending on your tax bracket.

The reality, though, is that the outcomes will be almost identical regardless of which path you choose.

JC
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Re: Automating VT with VTI/VEA/VWO?

Post by muffins14 »

hiddenpower wrote: Fri Jun 02, 2023 3:29 pm
Raspberry-503 wrote: Fri Jun 02, 2023 3:27 pm lookup GOOGLEFINANCE https://blog.sheetgo.com/google-sheets- ... le-sheets/
https://www.google.com/finance/ can help you figure out the ticker name used by the function above
The MktCaps tab in the spreadsheet you link shows the indexes used.

Once you have the market cap for each index, you can figure out the ratios

Interestingly I can't seem to access the actual indexes in excel. If I compare market caps of VTI/VEA/VWO I get 61/24/15 which seems to come out close enough but is not technically correct since they are the market cap of funds, not indexes
I don't think one should use the market caps but instead try to find the FTSE index and use the price, then set a ratio equivalent to VT so it drifts close enough. Does an index for each of these exist? Using the price of the underlying etf could work except that they split, so I guess another way is using a dollar amount.
I think you are getting a little too in the weeds.

You could just automatically invest 60/40 total US vs total l Intl and rebalance once per quarter or year and be done with it. No extra work than that.

Or you can log in once per month and buy whatever is lagging. It really just takes a few seconds to place the ETF orders, and doing it that way won’t get in the way of any of your tax loss harvesting
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Re: Automating VT with VTI/VEA/VWO?

Post by hiddenpower »

muffins14 wrote: Tue Jun 06, 2023 8:56 am I think you are getting a little too in the weeds.

You could just automatically invest 60/40 total US vs total l Intl and rebalance once per quarter or year and be done with it. No extra work than that.

Or you can log in once per month and buy whatever is lagging. It really just takes a few seconds to place the ETF orders, and doing it that way won’t get in the way of any of your tax loss harvesting
LOL I mean, you're right :-). I just love to automate steps. I have a nice rebalance google sheet for my IRAs, along with some momentum tracking information in there, and it would be really slick to have the world market cap weights. I can definitely live with computing it myself once a year but it would just be cool. If there's an underlying index where the prices don't split for US, emerging, and developed, then it should be easy to set the ratio once and forget it for 5 years
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Re: Automating VT with VTI/VEA/VWO?

Post by Northern Flicker »

If you hold VTI and VXUS at market cap weight, you would not beed to rebalance to maintain market cap weight. The issue for someone in their accumulation phase is that the weightings for new contributions will shift if you want them at market cap weight to keep the funds balanced at market cap weight.

Just monitor it say quarterly and adjust the new contribution percentages when needed to bring it back to market cap weight.
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Re: Automating VT with VTI/VEA/VWO?

Post by Icebreaker »

I think my post would be a good fit to push this thread. I am planning to recreate VT with VTI + VEA + VWO.
I checked the region exposure and small/med/large cap distribution of VT and it seems that currently a
62% VTI + 28.5% VEA + 9.5% VWO would recreate VT almost perfectly.
My plan is to check the market cap of VT once a quarter and see if my monthly contribution split would still recreate it.
If for example US goes down to 60%, I readjust my split accordingly.
Probably a newbie question but I want to make sure I am not missing something with my logic.
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