Investing - Theory, News & General • Besides higher dividends with etf vanguard value vs vanguard total stock, perhaps other issues apply? Comments ?

The extra dividends are reinvested for liquidity or growth for our children. The one percent difference seems minor compared to perhaps other benefits of VTV. I lived in a state with no state income taxes.

I would think they'd want the highest returns rather than extra dividends (which are not free money). It's total return that matters. If you look at the returns below VTI outperformed. Now maybe that was just since 2015 or 2017 but still, you know with VTI you'll get the return of the market.



Source

Why VTV, I’m afraid of the high PE and technology companies emphasize in VTI.

PE for VTI is 25, PE for VTV is 20. PE is not necessarily a predictor of future returns.

VTV gives me greater exposure to other industries…there is some overlap but some sectors are more emphasized in VTV.

You don't have "other industries" with VTV that you don't already have with VTI because VTI is TOTAL. You may have different weightings to the same industries (and maybe that's what you meant by "greater") but you don't have anything with VTV that you don't have with VTI.

Here's VTI:

Basic Materials 1.80%
Consumer Discretionary 13.60%
Consumer Staples 4.30%
Energy 4.00%
Financials 11.20%
Health Care 11.50%
Industrials 12.60%
Real Estate 2.70%
Technology 33.60%
Telecommunications 1.90%
Utilities 2.70%

And VTV:

Basic Materials 1.60%
Consumer Discretionary 7.50%
Consumer Staples 9.10%
Energy 7.10%
Financials 20.20%
Health Care 17.10%
Industrials 15.30%
Real Estate 3.10%
Technology 10.10%
Telecommunications 3.30%
Utilities 5.40%

You see, both funds have the same industries. Different allocations to those industries, but not different industries.

The biggest differences with VTV I see are : 1. a bigger allocation to financials and 2. a smaller allocation to technology.

But you always have to ask yourself, why you think you know more than the market?

Value sectors have not done as well but maybe it’s shifting.

The following is not just purely value, it's small cap value, but the idea is the same. Sometimes investors find holding value very hard because it can have very long periods of underperformance (relative to the market) and then short bursts of outperformance that (in the past) has made it worthwhile to hold (to get the outperformance relative to the market, long term). But you have to have extraordinary patience. Some have argued the behavioral aspect is why there even is a value premium; because so many give up on the thing right before the outperformance shows up. Are you a patient person? Investor know thyself:

I do get some diversification with VTV.

again, not sure how you are defining diversfication. VTI has ALL stocks in the market. VTV is overlapped by 42% (source: https://www.etfrc.com/funds/overlap.php) but you're not getting anything that VTI doesn't already contain.

If you want diversification you'd want to hold Vanguard Total International Stock Market Index Fund (or ETF). That gives you some of the same sector diversification (in terms of more weighting to other sectors rather than technology) AND DIFFERENT companies not already contined in VTI.

VTV has a lower standard deviation plus some other measurements.

Look at the first chart I posted above. VTV had a drawdown of -59.27%. VTI had a drawdown of -55.45%. If you consider the volatility of VTV: 18.93% vs the volatility of VTI: 19.04% significant, ok, but I don't see these as very much different in terms of standard deviation/volatility, etc. (the ulcer index was higher for VTV than VTI) And overall VTI had higher risk adjusted returns (sharpe and sortino) than VTV, which means you took some risk with VTV that you weren't rewarded for taking.

what do you think now?

Statistics: Posted by arcticpineapplecorp. — Sat Sep 07, 2024 9:48 pm — Replies 2 — Views 115

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