Based on your numbers (ERs, +50% unrealized gains, and a ~22% cap-gains hit ≈ 11% of the position value):
If you switch everything now into ~0.03% ER funds:
Purely on the fee delta, it doesn’t pencil out for three of the four—except DODFX. DFEOX is clearly not worth selling today.
More sensible path: stop and redirect.
Turn off dividend reinvestment and stop adding new money to the legacy funds. Send all new cash and distributions into a low-cost ETF mix (~0.03% ER) with tax-loss harvesting. Then migrate positions gradually when you can reduce the tax bite (TLH opportunities, charitable gifting, or paired hedges).
Sell DODFX and move the proceeds to a broad, low-cost international index (VXUS/IXUS/FTSE ex-US). Take the tax hit—over a long horizon, the fee savings likely win.
Freeze AVEM/AVDE/DFEOX: no reinvestment, no new buys. Funnel fresh money to the low-fee portfolio (with TLH turned on).
How to migrate the rest
Wait for harvestable losses during drawdowns to offset gains, then trim AVEM/AVDE/DFEOX—start with older/high-basis lots.
If you give to charity annually, consider donating the highest-gain shares to a DAF (no cap-gains tax + a deduction), then buy the low-fee replacement with cash.
Or spread realizations over multiple years to avoid higher brackets/surtaxes.
Asset location (going forward)
Park high-ER / high-turnover / high-distribution funds in tax-advantaged accounts.
Keep low-ER, low-turnover, accumulation-style funds in taxable accounts.
Where I draw the “ER too high” line in taxable accounts with embedded gains
ΔER ≥ 0.50%: usually worth swapping now (DODFX fits).
ΔER 0.20%–0.30%: only swap if you can lower taxes (TLH/charitable gifts/staggered sales).
ΔER ≤ 0.15%: rarely worth an immediate taxable sale unless there’s a strong non-fee reason (e.g., unwanted factor tilt).
One last thing on TLH
Tax-loss harvesting mainly defers taxes; it’s not a permanent freebie. “Permanent” benefits usually come from charitable donations, step-up in basis at death, or realizing gains later in lower brackets.
If you switch everything now into ~0.03% ER funds:
Purely on the fee delta, it doesn’t pencil out for three of the four—except DODFX. DFEOX is clearly not worth selling today.
More sensible path: stop and redirect.
Turn off dividend reinvestment and stop adding new money to the legacy funds. Send all new cash and distributions into a low-cost ETF mix (~0.03% ER) with tax-loss harvesting. Then migrate positions gradually when you can reduce the tax bite (TLH opportunities, charitable gifting, or paired hedges).
Sell DODFX and move the proceeds to a broad, low-cost international index (VXUS/IXUS/FTSE ex-US). Take the tax hit—over a long horizon, the fee savings likely win.
Freeze AVEM/AVDE/DFEOX: no reinvestment, no new buys. Funnel fresh money to the low-fee portfolio (with TLH turned on).
How to migrate the rest
Wait for harvestable losses during drawdowns to offset gains, then trim AVEM/AVDE/DFEOX—start with older/high-basis lots.
If you give to charity annually, consider donating the highest-gain shares to a DAF (no cap-gains tax + a deduction), then buy the low-fee replacement with cash.
Or spread realizations over multiple years to avoid higher brackets/surtaxes.
Asset location (going forward)
Park high-ER / high-turnover / high-distribution funds in tax-advantaged accounts.
Keep low-ER, low-turnover, accumulation-style funds in taxable accounts.
Where I draw the “ER too high” line in taxable accounts with embedded gains
ΔER ≥ 0.50%: usually worth swapping now (DODFX fits).
ΔER 0.20%–0.30%: only swap if you can lower taxes (TLH/charitable gifts/staggered sales).
ΔER ≤ 0.15%: rarely worth an immediate taxable sale unless there’s a strong non-fee reason (e.g., unwanted factor tilt).
One last thing on TLH
Tax-loss harvesting mainly defers taxes; it’s not a permanent freebie. “Permanent” benefits usually come from charitable donations, step-up in basis at death, or realizing gains later in lower brackets.
Statistics: Posted by Lee Brus — Tue Oct 07, 2025 5:59 pm — Replies 1 — Views 127