Does anyone have experience with Vanguard’s digital advisor’s tax loss harvesting?

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  • #82628 Reply

      Would it be worth the .25% fee? I like to avoid fees, but would it gain me more than it costs if I’m just investing in VTI? I’ve been receiving emails about it and am getting curious.

      #82630 Reply

        Reviews such as nerdwallet and investopedia from late 2022 and early 2023 say VG’s DAS does not have TLH, but VG’s current DAS page lists it as a feature. So, I wonder whether VG recently added the feature. That would mean nobody probably has much experience.

        I did $6k in TLH myself last year, which will spread ove two tax years, so I know how valuable it is. That said I have skepticism about the need for automation of it. I didn’t turn on automated TLH when I used Betterment for four years. If I were to consider it I would need to have a lot of detail about how it’s going to work. I searched VG for the level of detail I would require, such as the below bullets, and I did not find any info:
        – how does VG identify the conditions that will trigger a TLH sale (% loss threshold for example)
        – are there criteria governing the shares to be sold beyond just the existence of a loss (e.g., shares have a min holding period before could be TLHd, min $ value of loss, whole share/partial share criteria, etc.)?
        – how are TLH pair funds identified? Per your question, you will not just have VTI if a TLH is executed. A TLH pair fund will be purchased as soon as possible for each TLH sold fund.
        – what is maximum timing delay for being in cash from the TLH sell and the TLH pair buy.

        #82631 Reply

          I don’t have direct experience, but I did use a roboadvisor with TLH for several years.

          .25% is pretty steep; you’ll also be holding lower-risk assets that’ll drag on returns.

          Once you hold something that appreciates for a few years, the opportunities for loss harvesting go away. Shares that I bought in 2016 and earlier don’t even go low enough to TLH during downturns, so the amount of losses that can be harvested decreases with time. It sounds good in theory, but in practice it ends up being a minimal improvement at best.

          #82632 Reply

            Probably not.

            If I were going to pay .25% I’d go with something like wealthfront that does direct indexing and tax loss harvesting.

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