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In my effort to reduce the ER, to swap vcvlx(Vanguard Capital [email protected]) to vig ( Vanguard Dividend Appreciation ETF @0.10) under Large blend category: what factors should I consider? Thanks in advance. I am still searching for etf alternative to prwcx ( @0.75).
2) Why are you looking to replace a fund that is looking for opportunistic values in the mid-cap space with one that seeks dividend growth in the large/giant cap space? A dividend growth strategy will very rarely be a value one since you're buying earnings of well known names. These funds behave very differently.
3) What does this do to your asset allocation? VCVLX has a big chunk of some foreign in there, as well as a lot more all-cap names. VIG is an all-American index focusing on steady-eddie type equities.
4) Are there tax implications?
5) Are there any other reasons for the move besides ER?
FWIW, to my mind you might be looking the wrong way 'round. There really isn't an ETF replacement for PRWCX because it uses a very specific active strategy (using preferreds and convertibles for value/arbitrage purposes, to increase income, and to mitigate volatility in a core fund). However, if you're looking to replace it with another core equity fund, a dividend growth strategy like VIG, SCHD, or VDIGX is probably as close as you're going to get.
Also have a look at this thread, where MFOers discuss owning a portfolio of div growth stocks, which is the cheapest alternative of all if you have enough funds and aren't DCAing.
@mrdarcey: Thx for comments. The objective was lowering ER only. I am not that financially savvy to do rigorous analysis. Per se vcvlx,prwcx and vhcox/vpccx ( i did not mention earlier though I own these too- I try to put a foot in before a fund closes, for making deposits later) have good pedigree.Will look into the thread you have suggested.
Comments
1) Why are you worried about ERs, especially on a funds that are already fairly low cost? This is meant honestly, not as an active/passive debate question. There is some evidence Vanguard's active funds outperform their indices, and VIG has trailed VDIGX over all meaningful time periods since inception.
2) Why are you looking to replace a fund that is looking for opportunistic values in the mid-cap space with one that seeks dividend growth in the large/giant cap space? A dividend growth strategy will very rarely be a value one since you're buying earnings of well known names. These funds behave very differently.
3) What does this do to your asset allocation? VCVLX has a big chunk of some foreign in there, as well as a lot more all-cap names. VIG is an all-American index focusing on steady-eddie type equities.
4) Are there tax implications?
5) Are there any other reasons for the move besides ER?
FWIW, to my mind you might be looking the wrong way 'round. There really isn't an ETF replacement for PRWCX because it uses a very specific active strategy (using preferreds and convertibles for value/arbitrage purposes, to increase income, and to mitigate volatility in a core fund). However, if you're looking to replace it with another core equity fund, a dividend growth strategy like VIG, SCHD, or VDIGX is probably as close as you're going to get.