Approximating Total Stock Market

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Investors wishing to invest in Vanguard Total Stock Market Index Fund often face a situation where they have to approximate it with the funds available in their employer sponsored plans and quite possibly some other funds available in other accounts such as a Roth IRA.

This page shows a few examples of approximating Vanguard Total Stock Market Index Fund with funds covering specific parts of the market.

Examples

Funds	Morningstar Style Box
100% Vanguard Total Stock Market Index Fund (VTSMX) (0.15%)	24 24 24 6 6 7 3 3 3
80% Vanguard 500 Index Fund (VFINX) (0.15%) 20% Vanguard Extended Market Index Fund (VEXMX) (0.24%) Note: This 80/20 ratio is also shown on the Vanguard Benchmark Statistics page.	24 25 23 6 7 7 3 3 3
81% Vanguard 500 Index Fund (VFINX) (0.15%) 6% Vanguard Mid-Cap Index Fund (VIMSX) (0.21%) 13% Vanguard Small-Cap Index Fund (NAESX) (0.22%)	24 25 22 6 7 6 3 3 3
83% Vanguard 500 Index Fund (VFINX) (0.15%) 17% Vanguard Small-Cap Index Fund (NAESX) (0.22%)	25 26 22 5 6 5 4 4 4
86% Vanguard 500 Index Fund (VFINX) (0.15%) 14% iShares Russell 2000 Index (IWM) (0.20%)	26 27 23 4 4 3 4 4 5
82% Vanguard 500 Index Fund (VFINX) (0.15%) 11% iShares S&P MidCap 400 Index (IJH) (0.20%) 7% iShares S&P SmallCap 600 Index (IJR) (0.20%)	24 24 24 6 7 7 3 3 3
85% Vanguard 500 Index Fund (VFINX) (0.15%) 15% Vanguard Tax-Managed Small-Cap Fund Inv (VTMSX) (0.13%)	25 26 23 5 4 4 3 5 4
88% Vanguard Large Cap Index Fund (VLACX) (0.20%) 12% Vanguard Small-Cap Index Fund (NAESX) (0.22%)	24 25 23 6 7 7 3 3 3
92% iShares Russell 1000 ETF (IWB) (0.15%) 8% iShares Russell 2000 ETF (IWM) (0.23%)	24 24 24 6 6 7 3 3 3
82% John Hancock 500 Index (JEINX) 11% John Hancock Mid Cap Index (JECIX) 7% John Hancock Small Cap Index (JESIX)	24 24 24 6 6 7 3 3 3

• These percentages were computed on Aug 16, 2008, except where otherwise noted.
• The style box numbers were computed by Morningstar Instant XRay.
• Computation was done by the method of least squares.
• Investors contemplating on using an S&P MidCap 400 fund, for example, may consider the example above that uses IJH. However, there may be slight implementation differences between the S&P MidCap 400 fund you have access to and IJH.
• Two funds may appear to track the same portion of the market (say, mid-cap), but their holdings may differ depending on the indexes they track.

References

 

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