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How many index ETFs are too many?
Old 04-27-2018, 09:18 AM   #1
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How many index ETFs are too many?

Last year I significantly decreased my trading and went (primarily) to index ETFs. But after posting once, I was met with a response of "an a partridge in a pear tree." This got me to wondering if I am overcomplicating my portfolio. So without going into how many I have, I wonder what others think.
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Old 04-27-2018, 09:31 AM   #2
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6
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Old 04-27-2018, 09:43 AM   #3
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6
And they would be? (Guess I should have added that in the op)
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Old 04-27-2018, 09:45 AM   #4
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6 is the correct answer. 7 would be too many.

70% Stock allocation:

1 US Total Market Index
2 US Value Index
3 US Small Cap Value Index
4 International Total Mkt Index
5 Emerging Market Index

30% Bond allocation:

6 Short term bond index
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Old 04-27-2018, 09:52 AM   #5
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6 is the correct answer.

70% Stock allocation:

1 US Total Market Index
2 US Value Index
3 US Small Cap Value Index
4 International Total Mkt Index
5 Emerging Market Index

30% Bond allocation:

6 Short term bond index
Too many.

1. US Total Stock Index
2. International Total Stock Index
3. Total Bond Index

% is variable based on risk tolerance and stage of life.
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Old 04-27-2018, 09:59 AM   #6
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Too many.

1. US Total Stock Index
2. International Total Stock Index
3. Total Bond Index

% is variable based on risk tolerance and stage of life.
If I add a REIT and commodity index, I can get the correct number up to 8.
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Old 04-27-2018, 10:06 AM   #7
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4:
60% stock allocation divided between US Total Stock Market Index (80%) and International Total Stock Index (20%).
40% bond allocation equally divided between Total Bond Index and Intermediate Term Corporate Bond Index.

When I retire, I will consolidate so all bond holdings are in the Total Bond Index.

Check out the Three Fund Portfolio thread on Bogleheads.org.
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Old 04-27-2018, 10:06 AM   #8
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+1 I think that many of the biggie's target date funds can be used as a starting point.

Vanguard's target date funds include domestic equities, international equities, domestic bonds and international bonds.. so a minimum of 4 is a decent place to start (though I know some people would question the need for international bonds and would go with 3).

We have 9. Our core 7 cover domestic equities, international developed equities, emerging market equities, domestic investment-grade bonds, domestic high-yield bonds, international developed bonds and emerging market bonds.

The 8th is a pesky position in DW's taxable portfolio in a S&P 500 index fund that has appreciated so much that I don't sell it for tax reasons and the 9th is a Blackrock target date investment-grade bond fund when all our others are Bulletshares.

For purposes of the above I have considered any maturity date bond fund investments as 1.... IOW, if I hold multiple years of investment-grade Bulletshares I view them as 1 rather than 3 or 5 or however many there are.
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Old 04-27-2018, 10:17 AM   #9
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Originally Posted by pb4uski View Post
+1 I think that many of the biggie's target date funds can be used as a starting point.

Vanguard's target date funds include domestic equities, international equities, domestic bonds and international bonds.. so a minimum of 4 is a decent place to start (though I know some people would question the need for international bonds and would go with 3).

We have 9. Our core 7 cover domestic equities, international developed equities, emerging market equities, domestic investment-grade bonds, domestic high-yield bonds, international developed bonds and emerging market bonds.

The 8th is a pesky position in DW's taxable portfolio in a S&P 500 index fund that has appreciated so much that I don't sell it for tax reasons and the 9th is a Blackrock target date investment-grade bond fund when all our others are Bulletshares.

For purposes of the above I have considered any maturity date bond fund investments as 1.... IOW, if I hold multiple years of investment-grade Bulletshares I view them as 1 rather than 3 or 5 or however many there are.
pb, I am curious to know what your AA is with the 9 investments you list above. I am considering getting heavier in bonds as I am in my early 70's. Care to share this?
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Old 04-27-2018, 10:27 AM   #10
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Originally Posted by aaronc879 View Post
Too many.

1. US Total Stock Index
2. International Total Stock Index
3. Total Bond Index

% is variable based on risk tolerance and stage of life.
LIKE .
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Old 04-27-2018, 01:23 PM   #11
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Originally Posted by gayl View Post
Last year I significantly decreased my trading and went (primarily) to index ETFs. But after posting once, I was met with a response of "an a partridge in a pear tree." This got me to wondering if I am overcomplicating my portfolio. So without going into how many I have, I wonder what others think.
What is your objective? If you don't know where you're going, any road will get you there.

For us, we are passive investors on the equity side. Vanguard World Index (VTWIX) suffices. There is no reason to have both a total US and a total international fund unless you want to adjust home country bias away from what the US market cap % is versus the total world market cap. IIRC it's been running 50-55%.

If you are someone who thinks they can call tops and bottoms at the sector level, you'll need one fund per sector that you like. Sectors can be geographical, based on company size, or based on line of business, like emerging market, large cap, and energy.
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Old 04-27-2018, 01:49 PM   #12
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For me ideally, 2...possibly 3, reality is more for me.

I hope in retirement to be simply at VTI, BOND

or possbily VUG, VOT, VBK until I get near the time I might need to re-allocate more convervatively to VTI (80), BOND (20).

In reality between DW and I we own 5. VBK, VOT, SCHG, SCHK, VHT.

*BOND can be substituted for your most tax efficient bond ETF.

Until I retire and rollover 401k/403b we are stuck with some index funds but have surprisingly decent options.
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Old 04-27-2018, 02:07 PM   #13
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What is your objective? If you don't know where you're going, any road will get you there.
I'm changing from an active investor with 300+ trades a year to fewer trades (~15 last year) but did great. As to withdrawal rate, was somewhere around 1% and anticipate that will be the rate going forward until RMD

So I would like to simplify with capital appreciation as the primary objective
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Old 04-27-2018, 02:11 PM   #14
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I'm changing from an active investor with 300+ trades a year to fewer trades (~15 last year) but did great. As to withdrawal rate, was somewhere around 1% and anticipate that will be the rate going forward until RMD

So I would like to simplify with capital appreciation as the primary objective
OK. That sounds reasonable. I would say one, VTWIX, plus whatever you want to do on the bond side.

We are not believers in bond funds, so I have no suggestions.
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Old 04-27-2018, 02:40 PM   #15
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pb, I am curious to know what your AA is with the 9 investments you list above. I am considering getting heavier in bonds as I am in my early 70's. Care to share this?
 Base AAUS/Int'l Target
Domestic Equities60.0%65.0% 39.0%
Int'l Equities 35.0%85.0%17.9%
Emerging Markets Equities  15.0%3.2%
Domestic IG Bonds35.0%80.0%85.0%23.8%
Domestic HY Bonds  15.0%4.2%
Int'l Bonds 20.0%85.0%6.0%
Emerging Market Bonds  15.0%1.1%
Cash5.0%  5.0%
    100.0%

Above is my target AA... based on an overall 60/35/5 plus a sprinkle of slice and dice.

Mind you that 2 of the 9 funds cited in my earlier post are unnecessary duplicates for the reasons that I described... but I have found an index fund to cover each asset class above.

I'll be the first to concede that I could probably fold the emerging markets equities and bonds into international and make things simpler. I could probably also fold the international bonds into domestic bonds without much detriment. I include those 3 for a bit of diversification and entertainment value.
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Old 04-27-2018, 03:48 PM   #16
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Originally Posted by pb4uski View Post
 Base AAUS/Int'l Target
Domestic Equities60.0%65.0% 39.0%
Int'l Equities 35.0%85.0%17.9%
Emerging Markets Equities  15.0%3.2%
Domestic IG Bonds35.0%80.0%85.0%23.8%
Domestic HY Bonds  15.0%4.2%
Int'l Bonds 20.0%85.0%6.0%
Emerging Market Bonds  15.0%1.1%
Cash5.0%  5.0%
    100.0%

Above is my target AA... based on an overall 60/35/5 plus a sprinkle of slice and dice.

Mind you that 2 of the 9 funds cited in my earlier post are unnecessary duplicates for the reasons that I described... but I have found an index fund to cover each asset class above.

I'll be the first to concede that I could probably fold the emerging markets equities and bonds into international and make things simpler. I could probably also fold the international bonds into domestic bonds without much detriment. I include those 3 for a bit of diversification and entertainment value.
Thanks, that gives me some food for thought as I need to move in the direction of less equities and more fixed income. I have been hovering about 70/20/10 with very little international equities or bonds.
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Old 04-27-2018, 05:35 PM   #17
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And they would be? (Guess I should have added that in the op)
1. Total stock market (VTI)
2. FTSE Developed Markets (VEA)
3. FTSE Emerging Markets (VWO)
4. FTSE All-World ex-US Small-Cap (VSS) for a tilt
5. Intermediate-Term Bond (BIV)
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Old 04-27-2018, 05:58 PM   #18
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Old 04-27-2018, 06:09 PM   #19
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Ok. So I'm not that far off with ETFs (3)

Total stock market 68%
International index 16%
Fixed income (1 + CDs) 14%
Just cash 2%

Retirements great
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Old 04-28-2018, 07:47 AM   #20
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Ok. So I'm not that far off with ETFs (3)

Total stock market 68%
International index 16%
Fixed income (1 + CDs) 14%
Just cash 2%
Similar to what I have. The majority of my investments are in a total market index fund, but for international I have a few. While I'm good with simply using the total market for my domestic investments, I haven't found the same with international. I have a few different international funds to capture a variety of approaches to International investing.

I don't really see a useful distinction for me between ETF and traditional MFs. I get the tMFs if I can and the ETFs if the account only has these available to me .
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