A Simple Portfolio [Equity Allocation]
- abuss368
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A Simple Portfolio [Equity Allocation]
I have read some posts lately where Bogleheads are noting they are simply dividing their equity allocations 50% US and 50% International.
This does represent more of the market weights and not as much home bias. I would expect this to follow the Boglehead philosophy of simplicity and diversification. Investment literature often tells us the expected returns over the long term should be about the same.
How many Bogleheads allocate their equities as such or are in the process of moving (or considering moving) to this simple half and half allocation.
This does represent more of the market weights and not as much home bias. I would expect this to follow the Boglehead philosophy of simplicity and diversification. Investment literature often tells us the expected returns over the long term should be about the same.
How many Bogleheads allocate their equities as such or are in the process of moving (or considering moving) to this simple half and half allocation.
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio
My answer is yes, but no. The equity side of my portfolio has 6 equally weighted slices. US, US SV, TInt, TSInt (VSS), REITS, Health Care. Since REITs and HC are predominately US, I say NO. Since US and Int are equally weighted I say YES.
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Re: A Simple Portfolio
It seems like it would be easy to rebalance and maintain.
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio
I keep 70/30 US/Int...how is 50/50 any easier to rebalance and maintain than 70/30?abuss368 wrote:It seems like it would be easy to rebalance and maintain.
Re: A Simple Portfolio
Everything is on a programmed spreadsheet (excel) and provides variances in % and $ from target. When a particular asset (equity or bond) is 10% off at a monthly close (from the paper on Opportunistic Rebalancing) it is adjusted. It is a simple, mechanical and unemotional process.abuss368 wrote:It seems like it would be easy to rebalance and maintain.
Re: A Simple Portfolio
I hold VTIAX at between 25% and 30% of equities. I arrived at this range primarily on the advice of the Vanguard website as well as what seems to be sort of the unofficial average of bogleheads.
Re: A Simple Portfolio
I hold 30% of equities in international because of that Vanguard paper that says holding 30% gives you something like 90% of the diversification benefit. Some Boglehead authors also recommend 30% as sort of good starting point for int'l.
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Re: A Simple Portfolio
Edit-- uh, never mind.
Last edited by pastafarian on Mon Feb 24, 2014 7:58 pm, edited 1 time in total.
Re: A Simple Portfolio
Yes and no for me too . How about "sort of"?
12.5% US TSM
12.5% US SCV
7.5% US REITS
32.5% US total
20% TSM x-US
7.5% Int SCV (fundamental index, so not a great choice, if had a better choice would be closer to even split like US)
27.5% x-US total
Depending how you want to factor in US REITS I am either over or under weight US stocks relative to international.
Tell me how to vote.
FWIW: I personally don't think the particular choice within a wide range is likely to matter a lot. If over the next X years US beats International those who lean US will come out ahead. But if over the next X years international beats US, those that lean Int will come out ahead. For the most part. There will likely be some very modest benefit due to correlations less than one, mostly showing up a small reduction in volatility, for those will at least a modest amount of each. Personally on the outside chance one or the other somehow tanks while the other does not, I would not go 100% either (though it would be unusual for either to tank and not to some degree take down the other).
12.5% US TSM
12.5% US SCV
7.5% US REITS
32.5% US total
20% TSM x-US
7.5% Int SCV (fundamental index, so not a great choice, if had a better choice would be closer to even split like US)
27.5% x-US total
Depending how you want to factor in US REITS I am either over or under weight US stocks relative to international.
Tell me how to vote.
FWIW: I personally don't think the particular choice within a wide range is likely to matter a lot. If over the next X years US beats International those who lean US will come out ahead. But if over the next X years international beats US, those that lean Int will come out ahead. For the most part. There will likely be some very modest benefit due to correlations less than one, mostly showing up a small reduction in volatility, for those will at least a modest amount of each. Personally on the outside chance one or the other somehow tanks while the other does not, I would not go 100% either (though it would be unusual for either to tank and not to some degree take down the other).
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
- RyeWhiskey
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Re: A Simple Portfolio
The entire equity portion of my portfolio is held in the Total World Stock Index. So, yes my domestic/international allocation is about 50/50 but no, I didn't do it on purpose, but yes, I kind of did.
This post was brought to you by Vanguard Total World Stock Index (VTWSX/VT).
Re: A Simple Portfolio
My equities are held in a 2:1 ratio of US to Int'l--just as easy for me to rebalance as 1:1.
Re: A Simple Portfolio
The philosophy that I"m trying to follow is to tilt towards small and value across US, ex-US developed, and Emerging Markets. I currently hold 60-40 US/ex-US ... I'm moving to 50/37/13 US/ex-US/EM ..... that seems to be more or less the world market capitalization and thus no tilting towards one market or another.
Re: A Simple Portfolio
I answered 'no' because of my 10% position in REITs, but if I were to exclude those, I am indeed at 50/50...
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Re: A Simple Portfolio
60/40 US/International, as I felt both Vanguard's 70/30 and more market like 50/50 had some good arguments and I could not make up my mind. So, I split it and intend to stay here.
Re: A Simple Portfolio
I do a 50/50 split. It's a compromise between holding market weight (which was 40/60 last time I checked?) and following Vanguard's recommendation. It also makes it easy to allocate my new dollars to the side that's been lagging behind.
edit: the Vanguard paper cites 46/54 as the US/Intl weighting as of Dec 31 2011. Anyone know where more recent data can be found? The Vanguard Key Benchmark Statistics page does not seem to include emerging markets.
edit 2: composition of Vanguard Total World indicates US equities as 49% of total - I think that's the best answer I could ask for.
edit: the Vanguard paper cites 46/54 as the US/Intl weighting as of Dec 31 2011. Anyone know where more recent data can be found? The Vanguard Key Benchmark Statistics page does not seem to include emerging markets.
edit 2: composition of Vanguard Total World indicates US equities as 49% of total - I think that's the best answer I could ask for.
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Re: A Simple Portfolio
In ancient times, 1980's I used VG co-mingled Trustees International 10 -20%. Post 2006 I've gone even more simple - VG Target 2015 and let them do the work.
Re: A Simple Portfolio
Regarding Total World Stock Index: When will admiral shares be available? I want to simplify my portfoloio but I can't justify buying this instead of lower cost admiral share Total Stock and Total International
I'm just a fan of the person I got my user name from
- abuss368
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Re: A Simple Portfolio
Didn't the book Elements of Investing recommend a two fund portfolio comprised of Total World and Total Bond?Day9 wrote:Regarding Total World Stock Index: When will admiral shares be available? I want to simplify my portfoloio but I can't justify buying this instead of lower cost admiral share Total Stock and Total International
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio
Let's just look this up here on the ole' IPS. Why, yes. Age in bonds; stocks divided 50/50 US/International. Nice and simple.
Re: A Simple Portfolio [Equity Allocation]
I let Vanguard do the work and match the allocations in the target retirement funds. See: Approximating Vanguard target date funds
(I retitled the thread.)
(I retitled the thread.)
Re: A Simple Portfolio [Equity Allocation]
I just rolled from Fidelity to Vanguard to a 3 fund portfolio. Stocks are 60% with Total US as 45% and Total Int as 15%. Vanguard rep told me yesterday their most recent position recommended Int between 20% and 40%. There are so many US companies that are heavily diversified in foreign countries now that the Total US stock has a good representation in INT anyway.
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Re: A Simple Portfolio [Equity Allocation]
Makes a lot of sense. I have noticed a change in Vanguard's communication over the last year from their articles, blogs, webcasts, etc. There is a often noted recommendation of 20% - "up to world market weights".vested1 wrote:I just rolled from Fidelity to Vanguard to a 3 fund portfolio. Stocks are 60% with Total US as 45% and Total Int as 15%. Vanguard rep told me yesterday their most recent position recommended Int between 20% and 40%. There are so many US companies that are heavily diversified in foreign countries now that the Total US stock has a good representation in INT anyway.
World market weight is somewhere around 60% and always fluctuates. Hence the 20% - 60% lead us to select the middle at 40%. The Vanguard research report showing the benefits peaked at 30% - 40% - they were practically the same.
I will not be surprised if this is the next change to the Target or Life Strategy funds.
John C. Bogle: “Simplicity is the master key to financial success."
- Random Musings
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Re: A Simple Portfolio [Equity Allocation]
Currently, I'm at 60/40, above the 70/30 that the Target funds utilize. I think that is in the sweet spot range.
Have I thought about 50/50 - yes - will I change my IPS to reflect a more globalized weighting - not sure - but if I do, I'll probably do it over a period of time.
For now, inertia will rule.
RM
Have I thought about 50/50 - yes - will I change my IPS to reflect a more globalized weighting - not sure - but if I do, I'll probably do it over a period of time.
For now, inertia will rule.
RM
I figure the odds be fifty-fifty I just might have something to say. FZ
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Re: A Simple Portfolio [Equity Allocation]
That is where I am at. I am presently happy with 60% US and 40% International. Maybe in the future I will be 50% US and 50% International, but for now I am happy with the allocation.Random Musings wrote:Currently, I'm at 60/40, above the 70/30 that the Target funds utilize. I think that is in the sweet spot range.
Have I thought about 50/50 - yes - will I change my IPS to reflect a more globalized weighting - not sure - but if I do, I'll probably do it over a period of time.
For now, inertia will rule.
RM
I don't think it is a big deal as I am going to keep investing in the same asset classes. The question is the allocation between the two.
John C. Bogle: “Simplicity is the master key to financial success."
- abuss368
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Re: A Simple Portfolio [Equity Allocation]
Do you hold the Total World fund?gkaplan wrote:45%: Domestic Equity
55%: Foreign Equity
How did you arrive at the allocation? Market weights?
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio [Equity Allocation]
We are at 35% international, but trying to determine if moving towards 50% is advantageous. There seems to be good arguments for both world weights and the commonly referenced 30%, so it's hard to decide.
Re: A Simple Portfolio [Equity Allocation]
Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.
Re: A Simple Portfolio [Equity Allocation]
That is a very weak argument against holding a representative Global portfolio. "A lot of NON-US companies" have US presence.basspond wrote:Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.
I hold personally 50/50 US/non-US which now happens to approximate Global weights - currently 49/51 US/non-US per FTSE Global All Cap Index. The Global split fluctuates, my allocation doesn't.abuss368 wrote:I have read some posts lately where Bogleheads are noting they are simply dividing their equity allocations 50% US and 50% International....
How many Bogleheads allocate their equities as such or are in the process of moving (or considering moving) to this simple half and half allocation.
THIS is Larry Swedroe's take on this particular issue.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: A Simple Portfolio [Equity Allocation]
I don't hold the Total World Fund. I have split my foreign equity among the following four funds:abuss368 wrote:Do you hold the Total World fund?gkaplan wrote:45%: Domestic Equity
55%: Foreign Equity
How did you arrive at the allocation? Market weights?
Vanguard European Stock Index Fund Admiral Shares – Roth IRA
Vanguard Pacific Stock Index Fund Admiral Shares – Roth IRA
Vanguard FTSE All-World ex-US Small-Cap Index Fund – Roth IRA
Vanguard Emerging Markets Stock Index Fund Admiral Shares – Roth IRA
I did not arrive at my allocation through market weights. I just tried to come up with an elegant foreign equity allocation within a 60/40 Equity/Fixed Income.
Gordon
Re: A Simple Portfolio [Equity Allocation]
I 'do' 60%/40% equity/fixed and within equity 60% domestic/40% international.
I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant. - Alan Greenspan
- abuss368
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Re: A Simple Portfolio [Equity Allocation]
Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio [Equity Allocation]
Hardly, other than that dividing by two is a popular response to having no obviously better choice.abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
If you are asking if there is some analysis that used to support a different allocation for US investors and now suggests some good reason to divide by two, then I haven't seen it. My not having seen it proves little, however.
Re: A Simple Portfolio [Equity Allocation]
I don't think so.abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
Prior polls show roughly the same % of respondent's (~75%) put less than 50%/market weight in international stocks:
http://www.bogleheads.org/forum/viewtop ... &p=1783030 (Aug 2013)
http://www.bogleheads.org/forum/viewtop ... 0&t=103617 (Oct 2012)
http://www.bogleheads.org/forum/viewtop ... =1&t=91132 (Feb 2012)
http://www.bogleheads.org/forum/viewtopic.php?t=70974 (Apr 2011)
I'm sure I've missed some other polls.
Don't assume I know what I'm talking about.
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Re: A Simple Portfolio [Equity Allocation]
Good point. I am 60% US and 40% International and plan to stay the course.G-Money wrote:I don't think so.abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
Prior polls show roughly the same % of respondent's (~75%) put less than 50%/market weight in international stocks:
http://www.bogleheads.org/forum/viewtop ... &p=1783030 (Aug 2013)
http://www.bogleheads.org/forum/viewtop ... 0&t=103617 (Oct 2012)
http://www.bogleheads.org/forum/viewtop ... =1&t=91132 (Feb 2012)
http://www.bogleheads.org/forum/viewtopic.php?t=70974 (Apr 2011)
I'm sure I've missed some other polls.
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio [Equity Allocation]
My IPS says 2/3 US and 1/3 Int'l.
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Re: A Simple Portfolio [Equity Allocation]
A very informative an excellent thread thus far indeed!
Thanks Bogleheads!!!
Thanks Bogleheads!!!
John C. Bogle: “Simplicity is the master key to financial success."
Re: A Simple Portfolio [Equity Allocation]
YDNAL wrote:basspond wrote:Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.
That is a very weak argument against holding a representative Global portfolio. "A lot of NON-US companies" have US presence.
True, I have some foreign only holdings but not 50%. I am not advocating US over foreign, just that one might have more or less real stake in a market than they realize.
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Re: A Simple Portfolio [Equity Allocation]
I started out 50/50 in 1995 and I find it hard to change now.
VT 60% / VFSUX 20% / TIPS 20%
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Re: A Simple Portfolio [Equity Allocation]
I am 50/50 (or it at least started out that way) and I think it's now 52/48 favoring the US. I don't have any bonds and I don't plan on re-balancing unless it gets to greater than 60/40 either way. My Dad's job is investing for a foundation and he recommended up to a 50/50 split so that's what I got! I've read that Vanguard thinks any allocation over 40% International doesn't bring in much more return for an unnecessarily increased level of risk. Rick Ferri had a stat on his blog that said International outperforms the US about 40% of the time, so it's better to have the higher weight with the US because it outperforms International 60% of the time.
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