Matching TSM in 401K?

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lumos
Posts: 17
Joined: Thu Jul 11, 2013 7:52 pm

Matching TSM in 401K?

Post by lumos » Sun Aug 04, 2013 11:13 pm

I've been looking at the TSM equivalents at http://www.bogleheads.org/wiki/Approxim ... ock_Market and trying to match them up with the very low (.02-.04) ER funds available in my 401K, based on the info that they provide (below). Should I just put all US stock in the large cap and be done or involve the other funds? Should I try to find out the value/blend/growth makeup to know if I'm tilting or not? (There are also large and small value and growth funds available.) Any AA advice appreciated. Thank you!

Large Cap Index (large blend)
Giant: 51.25
Large: 36.12
Medium: 12.54
Small: 0.09

Mid Cap Index (mid blend)
Large: 1.00
Medium: 74.51
Small: 24.49

Small Cap Index (small blend)
Medium: 9.94
Small: 59.88
Micro: 30.18

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joe8d
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Location: Buffalo,NY

Re: Matching TSM in 401K?

Post by joe8d » Sun Aug 04, 2013 11:22 pm

70% Large Cap, 20% Mid Cap and 10% Small Cap would be close enough to TSM.
All the Best, | Joe

talzara
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Re: Matching TSM in 401K?

Post by talzara » Mon Aug 05, 2013 1:25 am

Vanguard now tracks the CRSP indexes for US stocks. Total Stock Market consists of 85% large-cap, 13% small-cap, and 2% micro-cap. (However, it may deviate by a few percent due to the bands used to reduce turnover.)

Note that these are CRSP definitions of capitalization size, and are different from the ones used by the 401k provider. For example, CRSP mid-cap is simply the bottom 15 percentage points of large-cap. This clearly is not the definition that the 401k provider is using.

To approximate TSM, you would find the breakpoints between the categories that the 401k provider is using, and then use that to allocate your funds. (Or use it as a starting point for tilting.)

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gnosis
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Re: Matching TSM in 401K?

Post by gnosis » Mon Aug 05, 2013 6:07 am


Topic Author
lumos
Posts: 17
Joined: Thu Jul 11, 2013 7:52 pm

Re: Matching TSM in 401K?

Post by lumos » Mon Aug 05, 2013 12:06 pm

Thanks for the responses. Yes, the Approximation Tables are where I started. Was just wondering if there was a way to fill in the style boxes with with % given the info I have about the 401K funds. Seems like you would need to know value/growth information if you ever wanted to tilt one direction. Difficult to do if you weren't sure if you might already be tilted somehow. As suggested, perhaps that isn't necessary to be in the ballpark and perhaps I'm over-analyzing.

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G-Money
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Re: Matching TSM in 401K?

Post by G-Money » Mon Aug 05, 2013 12:23 pm

It really depends how precise you want to be and what the rest of your holdings look like.

Do you have other funds in an IRA (Roth or traditional)? If so, you could fill in what you need there. You don't *need* to approximate TSM exclusively in your 401(k), although you have the good fortune of having excellent, low-cost options there. Do you have other very low cost options in your 401(k) that could help lower your total investment costs even more?

Do you tilt to SCV or otherwise? If so, then getting a part of your domestic equities to match TSM is much less important, since you'll be overweighting SCV (or something else) anyway. In that case, I'd probably just stick with Large Cap Index, and only add Small Cap Index if it is part of your tilting plan.

Do you place a high value on simplicity? If so, then go ahead and chart Large Cap index against TSM at Morningstar. If the performance of the two are close enough for you, then just stick with Large Cap and deal with a fewer funds.
Don't assume I know what I'm talking about.

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gnosis
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Joined: Wed Aug 13, 2008 9:05 pm

Re: Matching TSM in 401K?

Post by gnosis » Mon Aug 05, 2013 12:49 pm

lumos wrote:Thanks for the responses. Yes, the Approximation Tables are where I started. Was just wondering if there was a way to fill in the style boxes with with % given the info I have about the 401K funds. Seems like you would need to know value/growth information if you ever wanted to tilt one direction. Difficult to do if you weren't sure if you might already be tilted somehow. As suggested, perhaps that isn't necessary to be in the ballpark and perhaps I'm over-analyzing.
Whoops sorry I read your original post too quickly this morning

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