Russell 2500 - What role does this play in your investing?

[WhenIsItTime]

Been thinking a lot about asset allocation and benchmarks. Never thought much beyond S&P500 for stocks. Curious feedback on Russell 2500 (2500 mid/small cap stocks) and for those who use it how do you address in your portfolio?

 

[Animorph]

I'm working on 25% S&P, 25% rest of the U.S. stocks, 25% everything but U.S., and 25% bonds.

The smaller stocks allocation was a compromise instead of something like a total U.S. value fund. It provides some diversity over the even simpler total U.S. index.

 

[OldShooter]

I use the Russell 3000 and the ACWI (All Country World Index) as benchmarks. I don't think sector indices like the S&P 500, Russell 1000, EAFE, etc. are good measuring sticks for a portfolio.

For example, if the portfolio you're measuring is keeping up with the Russell 2500 that tells you nothing about whether mid/small caps are a good place to be. OTOH if that portfolio is lagging a total market index then it's time to decide whether you are satisfied with that given your strategy or whether you want to make a change. Same question if it's leading: why? and is that OK?

Measuring with sector indices like the S&P 500 is a popular tool for hucksters, too. A very dicey emerging market fund with recent good luck might crow about beating the S&P, which is totally irrelevant.

 

[Dtail]

I have a 15% small cap index fund allocation. Got slammed last year, but outperforming this year.
Who knows.

 

[target2019]

Russell 3000 is our core stock index. Then we tilt to Russell 2500 and small cap. It's more complicated, but that is the essential idea.
How much to tilt is the question, and ir depends on how much additional risk you're ok with..

 

[WhenIsItTime]

That is a big OUS position. Interesting.

 

[Lawrencewendall]

I'm about 50% Wilshire 4500 (TSP S Fund). I'm happy with it but will start converting to a total US Fund next year.