Poll:How granular or broad is your allocation?

[jIMOh]

I am currently in process of building my own investment portfolio after recovering from a divorce two years ago, and also help some friends and family out with their portfolios.

My own portfolio is 60-40 stocks-bonds right now.
I have a traditional which is 40-60
I have a Roth which is 80-20
both started with same amounts from a 401k rollover from a job I had for 6 months- total of $7k in these accounts.

I have a 401k which is 1 year old which is 60-40 with about $25k in it from 1 year of work.

The other portfolios I manage or help with have in excess of $100k in them per person.


My question is how granular do you get
Meaning 3 funds (S&P 500, foreign stock index, general bond index)
6-7 funds (S&P 500, S&P 400/mid cap index, S&P 600/small cap index, foreign large cap, foreign small cap, US bond index, foreign bond index)
or
do you go even granular that that 7-10 holdings (do you have a US long term bond, US inflation bond, corporate bond, high yield bond or just one generic bond fund, and why).

So I am asking for a holdings count, and which indexes do you use for tracking those holdings?

 

[W2R]

VBTLX (total bond market)
TSP "G Fund" (government bond fund)
cash
VWIAX (Wellesley)
VTSAX (total stock market)
VFWAX (FTSE All World Ex-US)


I log into Vanguard and the TSP every day or every other day, to see how my "babies" are doing. When I do this, I record it in Excel and figure out my AA there too. Goal is 55:45 (equities:fixed).

I casually watch the Dow, simply because I have done so pretty regularly since back in the 1950's. Too bad I was just a kid and had no money to invest until decades after that.

 

[utrecht]

I have 12 funds. Mostly index funds but also a few actively managed funds
(3) Large cap funds
Fidelity ContraFund
Oakmark Select
Vanguard Total Stock Market Index

(1) Mid Cap Fund
Fidelity Low Priced Stock

(1) Small Cap Fund
Vanguard Small Cap Index

(1) Health Care Fund
Vanguard Health Care Index

(1) Energy fund
Vanguard Energy Index

(1) Real Estate Fund
Vanguard Real Estate Index

(1) Emerging Markets Fund
Vanguard Emerging Markets Index

(2) Emerging Markets Bond Funds
Fidelity New Market Bond Fund
TCW Emerging Markets Bond

(1) Bond Fund
TCW Total Return Fund

Im at 60/40 with a total expense ratio of 0.43%

This mix has beaten Vanguard Wellington over the past 3, 5,and 10 years but with a tad more volatility. I use Wellington as my total benchmark since its a very good 60/40 fund.

At one point I thought this many funds might be excessive but then I did a back test of this portfolio to get the 10 year return for these 13 funds with the correct percentages. I included withdrawing 4% plus inflation every year. The back test resulted in a 8.1% return over the past 10 years. I did another back test but this time with rebalancing every year. This backtest resulted in an 8.8% return. After 10 years the rebalanced portfolio had 10% more money. If I had many less funds there would be alot less opportunities to rebalance between funds so Im leaving my portfolio as is.

 

[Midpack]

That's interesting. I'd be perfectly comfortable with one holding in most if not all asset classes (and expect I will one day), but I don't have just one holding in any of the equity asset classes as the OP has defined them. However, with tilts (small, value, EM & energy) I have only one fund in most of the asset classes as I define them (more equity categories)!

I take it REITs would be "other" in the OP's view.

I would not have any single holding of less than 5% of total portfolio though, less than that the effect is too trivial to bother with IMO. Another consideration in AA FWIW.

• Van TM Small-Cap Adm VTMSX - SC
• Van TM Capital Appreciation Fund Adm VTCLX - LC
• Van Total Stock Market Index Adm VTSAX - LC
• Van Small-Cap Value Adm VSIAX - SCV
• Van Value Index Adm VVIAX - LCV
• Van Dev Mkts Idx Adm VTMGX - Intl
• Van Emerging Mkts Adm VEMAX - EM
• Van Energy Fund Adm VGELX - Sector
• Van Short-Term Investment-Grade Fund Adm VFSUX
• Van Total Bond Market Index Fund Adm VBTLX
• Van REIT Index Adm VGSLX
• Ally cash
• H S A Health Equity - MMF
• iBonds
• DW's 401k - LC

 

[jIMOh]

I have 12 funds. Mostly index funds but also a few actively managed funds
(3) Large cap funds
Fidelity ContraFund
Oakmark Select
Vanguard Total Stock Market Index

(1) Mid Cap Fund
Fidelity Low Priced Stock

(1) Small Cap Fund
Vanguard Small Cap Index

(1) Health Care Fund
Vanguard Health Care Index

(1) Energy fund
Vanguard Energy Index

(1) Real Estate Fund
Vanguard Real Estate Index

(1) Emerging Markets Fund
Vanguard Emerging Markets Index

(2) Emerging Markets Bond Funds
Fidelity New Market Bond Fund
TCW Emerging Markets Bond

(1) Bond Fund
TCW Total Return Fund

Im at 60/40 with a total expense ratio of 0.43%

This mix has beaten Vanguard Wellington over the past 3, 5,and 10 years but with a tad more volatility. I use Wellington as my total benchmark since its a very good 60/40 fund.

At one point I thought this many funds might be excessive but then I did a back test of this portfolio to get the 10 year return for these 13 funds with the correct percentages. I included withdrawing 4% plus inflation every year. The back test resulted in a 8.1% return over the past 10 years. I did another back test but this time with rebalancing every year. This backtest resulted in an 8.8% return. After 10 years the rebalanced portfolio had 10% more money. If I had many less funds there would be alot less opportunities to rebalance between funds so Im leaving my portfolio as is.

Great info, I am looking at something granular like this, slightly different approach though (which is why I asked)

 

[audreyh1]

In my case other was a REIT fund.

US large, US medium, US small, Foreign large, foreign mid-small, REIT, US aggregate type bond fund intermediate-term (largest FI holding), short-term bond index, multi-sector bond fund that holds some foreign and EM debt as well as US debt including TIPs, government-backed bond funds covering predominantly munis and some GNMAs, cash.

No EM funds equity or debt. No precious metals or other commodities. No high yield bond funds or inflation indexed funds, although the core bond funds will own some in varying amounts. No treasury only funds as most of my bond bonds hold plenty already. No long-term bonds.

No asset class holding less than 5% of portfolio.

 

[pb4uski]

I'll concede what I do is probably overkill, but my target AA includes the following asset classes. The funds are the "core" funds for each asset class.

Asset Class	Fund Name	Ticker
Domestic Equities	Vanguard Total Stock Market Index Fund Admiral	VTSAX
International Equities	Vanguard Total International Stock Index Fund Admiral	VTIAX
Emerging Markets Equities	Vanguard Emerging Markets Stock Index Fund Admiral	VEMAX
Domestic Fixed Income:
Investment Grade	Vanguard Total Bond Market Index Fund Admiral	VBTLX
Investment Grade	Vanguard Intermediate-Term Investment-Grade Fund	VFICX
High Yield	Vanguard High Yield Corporate Fund Admiral	VWEAX
International Fixed Income	Vanguard Total International Bond Index Fund Admiral	VTABX
Emerging Markets Fixed Income	Vanguard Emerging Markets Government Bond Index Fund Admiral	VGAVX
Cash Equivalent	Discover Bank Online Savings

However, on the domestic fixed income side I am not actually currently holding any of those funds because of interest rate concerns and have instead gone with a PenFed 5 year CD and both investment grade and high-yield target maturity bond funds maturing in 2017 to 2020.

Also, a couple years ago I was doing some gains trading and sold Total Stock at a gain subject to 0% tax in our taxable accounts and bought a combination of S&P 500, Mid-Cap Index and Small-Cap Index that were functionally equivalent to Total Stock to sidestep Vanguard's frequent trading restrictions. I had originally intended to wait 90 days and then sell then and replace them with Total Stock, but in that 90 days there was a strong rally and at that point I didn't want to incur the tax on the gains so I just held on to them.

As a result, I am ashamed to say that I have 19 different tickers. My what a tangled web we weave.

 

[jIMOh]

If you own both S&P 500 and Wilshire 5000, can you explain why?

 

[Midpack]

If you own both S&P 500 and Wilshire 5000, can you explain why?

I don't own both, but among the likely answers:

• I want a tilt toward large cap companies vs strictly broad market (right or wrong, a conscious choice)
• I don't really know what to invest in, so I figure I should invest in lots of things to cover my bases (you might be surprised how many investors do this, though probably fewer here). There are probably more 401k's with a disjointed hodge-podge of funds than those with well thought out choices (I saw it with my employers for decades, despite the educational presentations/handouts we provided) - you see them here occasionally from newer members, who are beginning to (rightly) question what they're invested in.

 

[Animorph]

I use 35 funds, plus 2% cash, slice and dice down to EM small value, EM small growth, and frontier. Plus extra energy and real estate. But no bonds. I use an index ETF to benchmark each slice, an keep an eye on total world and retirement date fund performance to judge the entire portfolio. So far it's mostly a bit of work for no spectacular gain.


I put my mom in a simple four index fund portfolio, including bonds. I'll probably move to something like that if I get tired of slice and dice.

 

[WannabeRetired]

Animorph, what do you do instead of bonds then? Or are you 98 stocks and 2 cash? Thanks.

 

[pb4uski]

If you own both S&P 500 and Wilshire 5000, can you explain why?

I'm not sure if you were referring to my post or not but if you were, I explained why in the post. I do own both the S&P 500 and Total Stock but the S&P 500 position (along with Mid and Small Cap Index positions) were an attempt to sidestep Vanguard's frequent trading restrictions.

 

[Lsbcal]

Looking at what the herd is doing is probably not a good way to set one's strategy.

 

[Animorph]

Animorph, what do you do instead of bonds then? Or are you 98 stocks and 2 cash? Thanks.

98% stocks/ 2% cash

 

[tulak]

If you own both S&P 500 and Wilshire 5000, can you explain why?

I own both because in some of my tax deferred accounts, only an S&P 500 fund is available. I'd prefer to own only total US, but that has to wait until I can roll the funds over to an IRA.

I own total market with a small cap value and REIT tilt. I do this for both US and international in the same percentages. I have a 75/25 split, but it's more like 80/20 since I hold a chunk of Wellesley instead of a bond fund (15% Wellesley with 10% bonds/CDs). I might change that at some point, but there's no hurry.

I used to slice/dice more, especially with international, but I found the extra work wasn't really worth it. For equities, I'll eventually only have six funds, which is nice and easy to manage and still provides me with some benefit of a slice/dice portfolio.

 

[Cobra9777]

If you own both S&P 500 and Wilshire 5000, can you explain why?

I own both because in some of my tax deferred accounts, only an S&P 500 fund is available. I'd prefer to own only total US, but that has to wait until I can roll the funds over to an IRA. ...

We're in the same situation with DW's 457b, where the only decent option is an S&P 500 index fund. However, we complement this with VXF in a different account, in the amount needed, such that the two holdings combined equal the Wilshire 5000. VXF is a Vanguard ETF that tracks the Wilshire 5000, minus those stocks in the S&P 500.

 

[tulak]

We're in the same situation with DW's 457b, where the only decent option is an S&P 500 index fund. However, we complement this with VXF in a different account, in the amount needed, such that the two holdings combined equal the Wilshire 5000. VXF is a Vanguard ETF that tracks the Wilshire 5000, minus those stocks in the S&P 500.

I always figured the S&P 500 and Wilshire 5000 are close enough (at least return wise), so I never worried about the difference. This is a great approach to fill the gap and one that I didn't even know existed. Not sure I want to change, but I appreciate knowing it's an option. Thanks!

 

[ERTX]

80% U.S./International dividend stocks
10% Low Fee Sector ETFs (Consumer Staples, Utilities, Energy)
5% 1-3 year CDs
5% money market

 

[racy]

Hi jIm,
Take a look at these lazy portfolios (click on each one to see the holdings in each): Invest Simple with Lazy Portfolios - MarketWatch.com
Some have 3 or 4 funds, some have 11 funds.

 

[RobLJ]

I'm like Animorph, but part of it is that my wife has two roll-over funds; we have a taxable brokerage account; and I have three work accounts (one will be rolled into the 403bextra soon). I diversify with at least 3 funds in each account to avoid extreme swings. I may consolidate her two roll-overs in a brokerage IRA, however, which will also help. The goal is to reduce the holdings to about 16 funds.

 

[cranberryjoe]

My long term goal is to simplify my portfolio to the three fund style (Total US Stock, Total US Bond, Total International Stock). I hope to accomplish this before age 70 (13 years).

On the bond side, I recently replaced all my various bond funds with Vanguard Total Bond Market.

On the stock side, I did some tax loss harvesting last year to consolidate my international funds down to Vanguard Total International Stock Market. But I have a ways to go with US equities. I currently own funds in each of the equity categories listed in the poll, plus REIT. It will take some time to reduce the US portion to a single Total US Stock fund because of significant holdings and gains in taxable accounts.

 

[kgtest]

I have 12 funds. Mostly index funds but also a few actively managed funds
(3) Large cap funds
Fidelity ContraFund
Oakmark Select
Vanguard Total Stock Market Index

(1) Mid Cap Fund
Fidelity Low Priced Stock

(1) Small Cap Fund
Vanguard Small Cap Index

(1) Health Care Fund
Vanguard Health Care Index

(1) Energy fund
Vanguard Energy Index

(1) Real Estate Fund
Vanguard Real Estate Index

(1) Emerging Markets Fund
Vanguard Emerging Markets Index

(2) Emerging Markets Bond Funds
Fidelity New Market Bond Fund
TCW Emerging Markets Bond

(1) Bond Fund
TCW Total Return Fund

Im at 60/40 with a total expense ratio of 0.43%

This mix has beaten Vanguard Wellington over the past 3, 5,and 10 years but with a tad more volatility. I use Wellington as my total benchmark since its a very good 60/40 fund.

At one point I thought this many funds might be excessive but then I did a back test of this portfolio to get the 10 year return for these 13 funds with the correct percentages. I included withdrawing 4% plus inflation every year. The back test resulted in a 8.1% return over the past 10 years. I did another back test but this time with rebalancing every year. This backtest resulted in an 8.8% return. After 10 years the rebalanced portfolio had 10% more money. If I had many less funds there would be alot less opportunities to rebalance between funds so Im leaving my portfolio as is.

I own everything but the bond and EM funds you list here...with the exception of Contra, but I own APPL and UNP and a few others that I would consider make up my own "contra".

My expense ration is only .09 however which is odd but I think the main difference being 25% of my AA is in stocks at the moment with a total of 15funds. I am still in the accumulation stage of my wealth.

after this last dip S&P has barely got me beat this year. Energy has hurt me. Thinking of buying into EM again perhaps after Greece thing calms.