 Quote:
Originally Posted by phatrabbitzz7
The expense ratio on the Templeton EM fund is 1.41%, and I'm interested in more EM. I'm thinking about putting an additional 10% at Vanguard's EM fund.
In addition, I agree that small cap would be a better diversification than Fidelity Contrafund, and want to put 10% in that one as well. Question is where would I take the 10% from? I'm thinking of taking 5% from Vanguard Institutional Index (S&P 500) and Vanguard Total International Stock Index respectively.
So new mix will be the following:
Vanguard Institutional Index (S&P 500) - 20%
Vanguard Total International Stock Index Fund;Investor -25%
Vanguard REIT Index Fund;Institutional - 5%
Vanguard Mid-Cap Index Fund;Institutional -10%
Vanguard EM Fund - 10%
Templeton Emerging Markets Fund - 10%
Vanguard Total Bond Market Index Fund - 10%
Vanguard Small Cap Index Fund - 10%
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You have 45% international with more than 20% of this in emerging markets.
If you use the index, you have basic EM exposure. You would not need an additional 20% to overweight.
EM is "overweighted" in my portfolio and I only contribute 10% to my EM fund. Take 10% from EM to get small caps.
You only need a small piece of EM- these are TINY companies and countries.
In the US a large cap is probably greater than 10 billion in market cap
a US mid cap is probably between 3 and 10 billion in market cap
a US small cap is probably less than 3 billion in market cap
most established foreign markets will use similar market caps.
with emerging markets you could be dealing with an entire COUNTRY whose GDP is less than 1 billion, and many companies which might have a market cap of 500 MILLION.
The scales you are dealing with are significant- keep the large cap investments where they are and watch out for making large bets on real small things. Overweight yes. Bet the house, no.
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