Looking for a well-diversified portfolio of 100% stocks

[Stillwater007]

I am looking for a fairly simple diversified Portfolio consisting of NO Bonds. The reason why is that when I retire early in 7 years or so, my pension will be my fixed income source covering anywhere from 85% of my expenses to 100% if I live little more frugally. I do have about 2-3 years of savings to weather the big dips that are inevitable too.

I invest through Vanguard so most of my allocated investments is towards VTSAX. I was thinking to diversify a bit with maybe 20-30% in Foreign like VFWAX or VTIAX. I know there's a lot of talk about Value stocks but I think VTSAX is a blend of growth AND value?

Anyways, any advice with an aggressive, yet simple portfolio would be appreciated.

Thanks in advance.

[pb4uski]

Nothing wrong with VTSAX. I used to invest in VTIAX but the returns were so disappoinging for so long that I sold out and am now from Missouri on international equities. If they ever start generating attractive returns then I may reconsider.

[Ready]

I have a lot invested in VTIAX. I’m hoping that at some point the tide will turn and it will outperform the domestic stocks for a period of time. At least that is what the theory of reversion to the mean suggests should happen.

[RunningBum]

VTWAX would include everything, if you want a single fund. I'm glad I had VTSAX and VTIAX separately though. It made it easier to set my own ratio of US:Intl, plus it turned out I could tax loss harvest and eventually get out of international.

[38Chevy454]

I agree with pb4uski, international has lagged for a long time now. I have reduced my international, although not to zero. I figure that most big companies on US stock exchanges are also covering a lot of that international market, so I am in effect still having some, even in addition to a pure international type fund. I also think along the same lines as OP Stillwater007 that a pension is kind of representative of the fixed portion of the overall portfolio, and you can have your savings be a higher equities allocation than traditional 40-70 percentage cited by many.
Just beware that having no bonds will subject your portfolio to all of the market volatility, with no stabilizing effect of the bonds. Assuming you can accept that and not make panic decisions when inevitable downturns happen.

[OldShooter]

Quote:

Originally Posted by Stillwater007 ... Anyways, any advice with an aggressive, yet simple portfolio would be appreciated. ...

We are about as simple as it gets: Equities 98% VTWAX. Basically every investable stock in the world on a cap-weighted basis. Never any rebalancing, as the percentage International automatically tracks the International market cap.

This amounts to about 45% International, which I think is more than the typical portfolio here. I think 30% is more typical.

Vanguard's take/paper: "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf

Guru take/video: Kenneth French on International: https://famafrench.dimensional.com/v...home-bias.aspx

Edit: The classic illustration of the futility of trying to pick sector winners is the Callan "quilt chart:" https://www.callan.com/periodic-table/ (see video at bottom of page) I think lots of people around here will agree with that point, yet to me "US" and "International" are sectors and hence subject to the same rule, at least for long-term investors like DW and me. Hence, VTWAX.

[mrfeh]

While I'm not a fan of 100% equities, I like your plan. 20-30% in ex-US.

[flintnational]

We have held 30% international for decades. It has under performed. Nevertheless, late in 2019 I increased our international exposure to replicate the global market. We are currently about 45% international/55% US. I also include tilts to US Value, US SC Value and Emerging Markets. Just about all at Vanguard.

I like your overall reasoning to consider the pensions as your stable (bond like) allocation. We do the same. We have pensions, SS and cash that would cover our budget. And, our house is paid for. Accordingly, We run about 80% stocks. If we include the cash value of our pensions (cost to purchase per immediateannuities.com), our stock allocation is about 60%.

[VanWinkle]

Quote:

Originally Posted by RunningBum VTWAX would include everything, if you want a single fund. I'm glad I had VTSAX and VTIAX separately though. It made it easier to set my own ratio of US:Intl, plus it turned out I could tax loss harvest and eventually get out of international.

^^^^^+1

[racy]

For my international, I use VWILX, a managed international growth fund. Vanguard calls it a foreign large growth fund but about 19% of it is in emerging markets. VWILX has outperformed VTIAX in the 1 yr, 3 yr, 5 yr and 10 yr periods. It's also outperformed VTSAX in the 1, 3 and 5 yr periods. VWILX has 122 stocks whereas VTIAX has 7420.

[Dash man]

We watched a webinar recently by Schwab that showed some technical indicators that foreign equities may turn around in the near future. I’m sorry I don’t recall the indicators they used. But we’ve gone from zero to 10% foreign equities recently using SCHF and VEU ETFs. The foreign equity portion of our portfolio is up about 5% since we started to gradually buy in starting in January. We are considering going to 20%.

[Markola]

Remember those studies about how, if you miss just a handful of trading days in a given cycle your returns greatly underperform?

At 40% VTIAX/60 VTSAX for securities, I feel ready for the reversion to mean when it comes. Most US outperformance is due to the FAANGS, which is just too concentrated for my taste.

[OldShooter]

Quote:

Originally Posted by racy ... Vanguard calls it a foreign large growth fund but about 19% of it is in emerging markets. ...

Remember, China is in the emerging market category.

[Dash man]

Quote:

Originally Posted by OldShooter Remember, China is in the emerging market category.

Doesn’t it make up about 50% of the emerging markets?

[OldShooter]

Quote:

Originally Posted by Dash man Doesn’t it make up about 50% of the emerging markets?

I don't remember for sure; I think it is a little less. I don't pay much attention since we own everything anyway.

[mrfeh]

Quote:

Originally Posted by Markola Remember those studies about how, if you miss just a handful of trading days in a given cycle your returns greatly underperform? At 40% VTIAX/60 VTSAX for securities, I feel ready for the reversion to mean when it comes. Most US outperformance is due to the FAANGS, which is just too concentrated for my taste.

+1

Don't time the market; ignore 1/3/5 year returns. Choose your AA and rebalance.

[OldShooter]

Quote:

Originally Posted by Markola ... Most US outperformance is due to the FAANGS, which is just too concentrated for my taste.

Yes. VTWAX dilutes the S&P down to 40-45% so the FAANGs become less than 6% of the NAV. So no reason to worry IMO about the (likely) tech crash. Ain't diversification wunnerful?

[Ncc1701]

I use VIGI for International exposure, its more defensive than many others.

[gayl]

Quote:

Originally Posted by Stillwater007 ..... my pension will be my fixed income source covering anywhere from 85% of my expenses to 100% ......

That's why I'm:
SCHB 86.78%
PWZ 4.49% (taxfree bond ETF in taxable acct)
Cash 5.68%
Individual stocks and play: 3.08%

Pension covers 100% needs / wants

[ut2sua]

Quote:

Originally Posted by Stillwater007 I am looking for a fairly simple diversified Portfolio

We all want diversification because it is the only free lunch. One side effect of diversification is: not everything will be great at any one time (the hope is not everything will be bad at any one time and in the long run, the good will win out). In other words, some investment may/will look bad in most of the time in a diversified portfolio. In your case, adding internationals should help with the diversification as many has pointed out. Investing is so simple and yet so hard.