Build "three fund" portfolio using ishares

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Build "three fund" portfolio using ishares

Postby brown3218 » Fri Dec 28, 2012 11:58 am

I am trying to replicate the three fund portfolio using Fidelity's 30 commission free ishares. I realize that the expense ratios are a little higher.


I want to mimic these three funds:

Vanguard Total Stock Market (VTSMX)
Vanguard Total International (VGTSX)
Vanguard Total Bond Market (VBMFX)

Here are my optons:

FIDELITY NASDAQ COMPOSITE INDEX - ONEQ (0.31%)
ISHARES BARCLAYS TIPS BOND FUND - TIP (0.2%)
ISHARES CORE S&P 500 ETF - IVV (0.07%)
ISHARES CORE S&P MID-CAP ETF - IJH (0.15%)
ISHARES CORE S&P SMALL-CAP ETF - IJR (0.16%)
ISHARES CORE TOTAL U.S. BOND MARKET ETF - AGG (0.08%)
ISHARES DOW JONES EPAC SELECT DIVIDEND INDEX FUND - IDV (0.5%)
ISHARES DOW JONES SELECT DIVIDEND - DVY (0.4%)
ISHARES DOW JONES US REAL ESTATE - IYR (0.47%)
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND - HYG (0.5%)
ISHARES IBOXX $ INVESTMENT GRADE CORPORATE BOND - LQD (0.15%)
ISHARES JPMORGAN USD EMERGING MARKETS BOND FUND - EMB (0.6%)
ISHARES MSCI ACWI EX US INDEX FUND - ACWX (0.34%)
ISHARES MSCI ACWI INDEX FUND - ACWI (0.34%)
ISHARES MSCI EAFE - EFA (0.34%)
ISHARES MSCI EAFE SMALL CAP INDEX FUND - SCZ (0.4%)
ISHARES MSCI EMERGING MARKETS INDEX - EEM (0.67%)
ISHARES RUSSELL 1000 - IWB (0.15%)
ISHARES RUSSELL 1000 GROWTH - IWF (0.2%)
ISHARES RUSSELL 1000 VALUE - IWD (0.2%)
ISHARES RUSSELL 2000 - IWM (0.23%)
ISHARES RUSSELL 2000 GROWTH - IWO (0.25%)
ISHARES RUSSELL 2000 VALUE - IWN (0.37%)
ISHARES RUSSELL 3000 - IWV (0.2%)
ISHARES S&P 500 GROWTH - IVW (0.18%)
ISHARES S&P 500 VALUE - IVE (0.18%)
ISHARES S&P MIDCAP 400 GROWTH - IJK (0.25%)
ISHARES S&P MIDCAP 400 VALUE - IJJ (0.27%)
ISHARES S&P NATIONAL MUNICIPAL BOND FUND - MUB (0.25%)
ISHARES S&P SMALLCAP 600 GROWTH - IJT (0.25%)
ISHARES S&P SMALLCAP 600 VALUE - IJS (0.29%)

I think I've matched the international fund (VGTSX) = ISHARES MSCI ACWI EX US INDEX FUND ACWX
Which fund or funds will match Vanguard Total Stock Market (VTSMX) and Vanguard Total Bond Market (VBMFX)?
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Re: Build "three fund" portfolio using ishares

Postby jej » Fri Dec 28, 2012 12:05 pm

Why are you doing this?
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Re: Build "three fund" portfolio using ishares

Postby brown3218 » Fri Dec 28, 2012 12:08 pm

I'm taking that advice of this site and trying to stick with the three asset classes stated above. I need to do this at Fidelity, and I only have around $1500 in this account. I could build a three fund portfolio with mutual funds but it It takes a minimum of $2500 per mutual fund at Fidelity.
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Re: Build "three fund" portfolio using ishares

Postby Barry Barnitz » Fri Dec 28, 2012 12:17 pm

Here are your corresponding iShares:


Vanguard Total Stock Market (VTSMX) --->ISHARES RUSSELL 3000 - IWV (0.2%)
Vanguard Total International (VGTSX)---> ISHARES MSCI ACWI EX US INDEX FUND - ACWX (0.34%)
Vanguard Total Bond Market (VBMFX) ---> ISHARES CORE TOTAL U.S. BOND MARKET ETF - AGG (0.08%)


regards,
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Re: Build "three fund" portfolio using ishares

Postby brown3218 » Fri Dec 28, 2012 12:29 pm

Thank you!
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Re: Build "three fund" portfolio using ishares

Postby retiredjg » Fri Dec 28, 2012 12:51 pm

You've already gotten the answer from Barry, but you might find this article handy for future reference.

http://online.wsj.com/article/SB1000142 ... lenews_wsj Enlarge the chart provided by Rick Ferri.

On closer look, to get international small caps, I guess you'll have to add iShares MSCI EAFE Small Cap (SCZ) since ACWX is only large and mid cap.
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Re: Build "three fund" portfolio using ishares

Postby Jay69 » Fri Dec 28, 2012 12:53 pm

brown3218 wrote:I'm taking that advice of this site and trying to stick with the three asset classes stated above. I need to do this at Fidelity, and I only have around $1500 in this account. I could build a three fund portfolio with mutual funds but it It takes a minimum of $2500 per mutual fund at Fidelity.


To be honest I would not bother with three funds for $1,500. Do you have other accounts you are building your AA around?
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Re: Build "three fund" portfolio using ishares

Postby jaj2276 » Fri Dec 28, 2012 1:17 pm

Barry Barnitz wrote:Here are your corresponding iShares:


Vanguard Total Stock Market (VTSMX) --->ISHARES RUSSELL 3000 - IWV (0.2%)
Vanguard Total International (VGTSX)---> ISHARES MSCI ACWI EX US INDEX FUND - ACWX (0.34%)
Vanguard Total Bond Market (VBMFX) ---> ISHARES CORE TOTAL U.S. BOND MARKET ETF - AGG (0.08%)


regards,


I would NOT use ACWX for my Total Intl replacement. Its avg daily trading volume is only around 300k shares a day so it's not out of the realm of possibility that this fund would get liquidated.

Morningstar has VGTSX as 83% Developed, 17% Emerging and 79% Large, 17% Mid, 4% Smalll.

I would use a combination of EFA (90% LC, 10% MC - 100% Developed), EEM (87% LC, 13% MC - 25% Developed, 75% Emerging), and SCZ (66% MC, 34% SC - 100% Developed) to replicate Total International. SCZ is thinly traded also but that should constitute a small portion of your holdings. EFA and EEM both have avg daily volume in the 10s of millions.
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Re: Build "three fund" portfolio using ishares

Postby retiredjg » Fri Dec 28, 2012 1:23 pm

jaj2276 wrote:I would NOT use ACWX for my Total Intl replacement. Its avg daily trading volume is only around 300k shares a day so it's not out of the realm of possibility that this fund would get liquidated.

What would happen if the fund got liquidated? Couldn't the poster just look for something else when/if that happened?
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Re: Build "three fund" portfolio using ishares

Postby jaj2276 » Fri Dec 28, 2012 1:33 pm

retiredjg wrote:
jaj2276 wrote:I would NOT use ACWX for my Total Intl replacement. Its avg daily trading volume is only around 300k shares a day so it's not out of the realm of possibility that this fund would get liquidated.

What would happen if the fund got liquidated? Couldn't the poster just look for something else when/if that happened?


Sure but then I'm thinking you might have a tax event?

Even if you don't, if you accumulate a sizable position (I have no idea what the OP will eventually get to) and then try to sell your position, you will impact the market much more in a thinly traded name like ACWX.

Of course if you weren't getting "free" trades, then going with the three funds I suggested would incur 3x as many trade commissions.
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Re: Build "three fund" portfolio using ishares

Postby tainted-meat » Fri Dec 28, 2012 2:33 pm

Will this be in a tax-advantaged account? If so, I'd just put the money in FFNOX (four-in-one index) until you building up your assets. I agree with jay69, that is not enough money to worry about doing a 3-fund portfolio.
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