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Russell 2500 - What role does this play in your investing?
03-03-2019, 03:18 PM
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#1
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Recycles dryer sheets
Join Date: Jun 2018
Posts: 445
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Russell 2500 - What role does this play in your investing?
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?
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03-03-2019, 05:35 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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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.
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03-03-2019, 05:36 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,351
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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.
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03-03-2019, 05:52 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,299
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I have a 15% small cap index fund allocation. Got slammed last year, but outperforming this year.
Who knows.
__________________
TGIM
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03-03-2019, 05:55 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,721
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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..
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03-04-2019, 06:00 PM
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#6
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Recycles dryer sheets
Join Date: Jun 2018
Posts: 445
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That is a big OUS position. Interesting.
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03-04-2019, 06:28 PM
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#7
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Full time employment: Posting here.
Join Date: Feb 2017
Location: Severn
Posts: 947
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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.
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