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What is the meaning of "goo.gl/2Z3V5Q" that appears in two of your responses ? For someone who's only been on the MFO Board a few days you responses have no merit. Ted
Yes, he appears to have an agenda. Why all the reference to "you could have duplicated" such and such fund with these x amount of ETFs? I don't get the relevance or the comparisons.
He appears to be directing traffic to a pretty interesting site that does autosubbing / reconstruction of a given fund using etfs. I would not be at all surprised that there is a market for this; Lord knows many of us try to do it manually. Ted, just copy/paste the "text" into your browser and you should see the results. This kind of shilling is not as objectionable as others, I guess.
I get the concept. Just messed around with an index fund in the tool... VTSAX.
Over the 5-year period ended July 31, 2016, it shot out a reference portfolio of: 51.16% SPY 17.08% VXF 15.97% IWB 5.33% IVW 3.55% VTV 3.40% MGC 2.61% MGV 0.90% IWO
Not sure why it wouldn't just say 100% VTI, the ETF that tracks the same index.....
This is not "you can duplicate results", it is you "could have" if you would have picked these ETFs by looking into your crystal ball - the future. Doesn't seem valuable to me. Seems after the fact.
You folks think I have a lot of mutual funds now ... Wonder how many etf's it would take replicate my 47 mutual funds positions. I don't believe I'll be taking a look see into this anytime soon.
@Old_Skeet lol Keep smiling. You may have heard of the term "exponential growth". This "starting slow, but then growing faster and faster all the time" growth is what they are referring to. So if you hear somebody claiming that the world population is doubling every thirty years, you know he is claiming exponential growth. http://www.purplemath.com/modules/expofcns.htm
I get the concept. Just messed around with an index fund in the tool... VTSAX.
Over the 5-year period ended July 31, 2016, it shot out a reference portfolio of: 51.16% SPY 17.08% VXF 15.97% IWB 5.33% IVW 3.55% VTV 3.40% MGC 2.61% MGV 0.90% IWO
Not sure why it wouldn't just say 100% VTI, the ETF that tracks the same index.....
That's because the returns of VTSAX and VTI are NOT always identical, despite being based on the same product (per Vanguard's patent). This is straight from Vanguard's website: VTSAX YTD (9/13/2016) 5.84%, 1Yr 11.43%, 5Yr 14.44% VTI YTD (9/13/2016) 5.85%, 1Yr 11.42%, 5Yr 14.44% Why is that, you ask? Because funds are priced at NAV, and ETFs are priced at market (in addition to having indicative NAVs). Case in point: check out the different price and NAV returns of VTI on M*. The reference portfolio you cited tracks VTSAX with a 0.36% cumulative return difference, which is a pretty good accuracy, given that this cumulative return was ~84% over the 5-year period. What you also get out of this reference portfolio is a detailed breakdown of all VTSAX exposures to various market capitalizations and styles. This info is useful in the overall portfolio construction, unless your entire portfolio (or its equity part) is just VTSAX.
You folks think I have a lot of mutual funds now ... Wonder how many etf's it would take replicate my 47 mutual funds positions. I don't believe I'll be taking a look see into this anytime soon.
I'd say you should. That's because with that many composite investment vehicles you most likely have significant overlaps of market caps, styles, etc. in the portfolio (disjoint "investment charters" or "categories" of funds really mean squat). Chances are that a dozen or even fewer ETFs could replicate your complex portfolio quite well and you may get a higher risk-adjusted return. But even if you do not, at least you will understand what factors your portfolio is truly exposed to and to which extent each. You may be surprised to learn that this is not what you intended to have. That said, this is just an opinion, not an investment advice. To each their own.
I get the concept. Just messed around with an index fund in the tool... VTSAX.
Over the 5-year period ended July 31, 2016, it shot out a reference portfolio of: 51.16% SPY 17.08% VXF 15.97% IWB 5.33% IVW 3.55% VTV 3.40% MGC 2.61% MGV 0.90% IWO
Not sure why it wouldn't just say 100% VTI, the ETF that tracks the same index.....
That's because the returns of VTSAX and VTI are NOT always identical, despite being based on the same product (per Vanguard's patent). This is straight from Vanguard's website: VTSAX YTD (9/13/2016) 5.84%, 1Yr 11.43%, 5Yr 14.44% VTI YTD (9/13/2016) 5.85%, 1Yr 11.42%, 5Yr 14.44% Why is that, you ask? Because funds are priced at NAV, and ETFs are priced at market (in addition to having indicative NAVs). Case in point: check out the different price and NAV returns of VTI on M*. The reference portfolio you cited tracks VTSAX with a 0.36% cumulative return difference, which is a pretty good accuracy, given that this cumulative return was ~84% over the 5-year period. What you also get out of this reference portfolio is a detailed breakdown of all VTSAX exposures to various market capitalizations and styles. This info is useful in the overall portfolio construction, unless your entire portfolio (or its equity part) is just VTSAX.
Yeah, there is marginal difference for the reason you mentioned, but it still doesn't make sense to attempt to replicate 1 index fund with 8 ETFS when you can basically get the same thing in singular ETF form. Your point about getting a detailed breakdown is irrelevant because with VTI you get that.....
Just stop trying to sell your site here. Nobody is interested.
There is probally some overlap in holdings ... however, investment strategy I am not so sure etf's can replace some of the funds. However, should I be looking for a weekend project I'll take a look.
Know this, there would be a sizeable tax bill associated with the sale of funds in my taxable accounts. I have owned most of these funds within my portfolio for a good number of years (a few of them for better than fifty years) with most having sizeable capital gains associated with them. Indeed for me to change things out would be expensive with taxation on realized capital gains and then there is the cost to reposition the portfolio.
In review, my portfolio's investment return year-to-date is 6.7%, through todays market close, and including cash it computes to 5.5%. In comparison, a 50/50 portfolio consisting of two index funds that I track has returned 5.0% while the Lipper Balanced Index has returned 4.8%.
I am thinking, the benefit (if any) would not outweigh the expense.
The details about how I have things organized along with the portfolio's current 46 positions can be referenced under the recent thread "How Many Funds Do You Own?" started by JoJo26 on September 12th. At times, I have owned upward in the 50's when I had some special investment positions (spiffs) engaged plus I held six funds in my large/mid cap sleeve instead of three.
Yeah, there is marginal difference for the reason you mentioned, but it still doesn't make sense to attempt to replicate 1 index fund with 8 ETFS when you can basically get the same thing in singular ETF form. Your point about getting a detailed breakdown is irrelevant because with VTI you get that.....
Just stop trying to sell your site here. Nobody is interested.
The purpose of this reply is not to "push" or "sell" anything, but rather to clarify the apparent misconceptions and have a meaningful discussion. Yes, it does not make sense to replicate a low-cost index fund with multiple ETFs, unless, for some reason, the investor wants to have a more granular control of portfolio holdings, at the expense of more complexity. Otherwise, no knowledgeable investor would do that. So, you are effectively latching onto a corner case example to bash the approach for the sake of it. No, with VTI you do not get a detailed breakdown. On Vanguard's site (Portfolio & Management tab), you only see the large-cap blend style of this ETFs, which may lead you to believe that this product has few, if any, mid- or small-cap holdings. You see a sector breakdown compared to that of the underlying CRSP index. But you do not see a detailed breakdown by capitalization or style. What you instead see is a list of all 3,605 holdings as of 8/31/2016 (good luck analyzing those by hand). Suppose an investment portfolio included both VTI and VOO (among other positions). How would you determine the overall exposure to the S&P 500 in that portfolio?
Im probably in the camp of having more funds than most people think are needed, but I have a regular ira, roth ira and taxable portfolio. I have 21 managed funds, 2 vanilla index funds, 4 bond funds 8 sector etfs. Largest fund holdings are VDIGX, VIG, PJP, VNQ, SMGIX and PRGTX.
I'd say you should. That's because with that many composite investment vehicles you most likely have significant overlaps of market caps, styles, etc. in the portfolio (disjoint "investment charters" or "categories" of funds really mean squat). Chances are that a dozen or even fewer ETFs could replicate your complex portfolio quite well and you may get a higher risk-adjusted return.
Actually markot06 ,that does make sense to me. It makes sense to me that a large portfolio of funds does have a ton of overlap, and returns would be better by reducing costs. The other way around, betting/guessing on which ETF's (many) would produce similar results to a well managed mutual fund, I just don't get.
I changed my perspective. Your contribution is stirring good discussion and opinions.
Comments
I would not be at all surprised that there is a market for this; Lord knows many of us try to do it manually.
Ted, just copy/paste the "text" into your browser and you should see the results.
This kind of shilling is not as objectionable as others, I guess.
Over the 5-year period ended July 31, 2016, it shot out a reference portfolio of:
51.16% SPY
17.08% VXF
15.97% IWB
5.33% IVW
3.55% VTV
3.40% MGC
2.61% MGV
0.90% IWO
Not sure why it wouldn't just say 100% VTI, the ETF that tracks the same index.....
You may have heard of the term "exponential growth". This "starting slow, but then growing faster and faster all the time" growth is what they are referring to. So if you hear somebody claiming that the world population is doubling every thirty years, you know he is claiming exponential growth.
http://www.purplemath.com/modules/expofcns.htm
VTSAX YTD (9/13/2016) 5.84%, 1Yr 11.43%, 5Yr 14.44%
VTI YTD (9/13/2016) 5.85%, 1Yr 11.42%, 5Yr 14.44%
Why is that, you ask? Because funds are priced at NAV, and ETFs are priced at market (in addition to having indicative NAVs). Case in point: check out the different price and NAV returns of VTI on M*.
The reference portfolio you cited tracks VTSAX with a 0.36% cumulative return difference, which is a pretty good accuracy, given that this cumulative return was ~84% over the 5-year period.
What you also get out of this reference portfolio is a detailed breakdown of all VTSAX exposures to various market capitalizations and styles. This info is useful in the overall portfolio construction, unless your entire portfolio (or its equity part) is just VTSAX.
Just stop trying to sell your site here. Nobody is interested.
Thanks for the sugguestion.
There is probally some overlap in holdings ... however, investment strategy I am not so sure etf's can replace some of the funds. However, should I be looking for a weekend project I'll take a look.
Know this, there would be a sizeable tax bill associated with the sale of funds in my taxable accounts. I have owned most of these funds within my portfolio for a good number of years (a few of them for better than fifty years) with most having sizeable capital gains associated with them. Indeed for me to change things out would be expensive with taxation on realized capital gains and then there is the cost to reposition the portfolio.
In review, my portfolio's investment return year-to-date is 6.7%, through todays market close, and including cash it computes to 5.5%. In comparison, a 50/50 portfolio consisting of two index funds that I track has returned 5.0% while the Lipper Balanced Index has returned 4.8%.
I am thinking, the benefit (if any) would not outweigh the expense.
Thanks again for making comment.
I got a chuckle form your comment. I hope others did as well.
Thanks again.
Skeet
The details about how I have things organized along with the portfolio's current 46 positions can be referenced under the recent thread "How Many Funds Do You Own?" started by JoJo26 on September 12th. At times, I have owned upward in the 50's when I had some special investment positions (spiffs) engaged plus I held six funds in my large/mid cap sleeve instead of three.
Yes, it does not make sense to replicate a low-cost index fund with multiple ETFs, unless, for some reason, the investor wants to have a more granular control of portfolio holdings, at the expense of more complexity. Otherwise, no knowledgeable investor would do that. So, you are effectively latching onto a corner case example to bash the approach for the sake of it.
No, with VTI you do not get a detailed breakdown. On Vanguard's site (Portfolio & Management tab), you only see the large-cap blend style of this ETFs, which may lead you to believe that this product has few, if any, mid- or small-cap holdings. You see a sector breakdown compared to that of the underlying CRSP index. But you do not see a detailed breakdown by capitalization or style. What you instead see is a list of all 3,605 holdings as of 8/31/2016 (good luck analyzing those by hand).
Suppose an investment portfolio included both VTI and VOO (among other positions). How would you determine the overall exposure to the S&P 500 in that portfolio?
Ted
Regards,
Ted
I changed my perspective. Your contribution is stirring good discussion and opinions.
You should at least get the pseudo name correct in the header line, now that a "hot list" exists.
>> Wonder how many etf's it would take replicate my 47 mutual funds positions.
I would not be surprised if it's fewer, or close.