Vanguard REIT index fully contained within TSM index?

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hudson4351
Posts: 307
Joined: Fri Aug 10, 2007 8:30 pm

Vanguard REIT index fully contained within TSM index?

Post by hudson4351 » Fri Oct 17, 2014 10:37 am

Is the Vanguard REIT index fund *fully* contained within the Vanguard total stock market index fund? I was pondering replacing 10% of my TSM allocation with the REIT index fund, but after searching the forums it seems that the REIT index is already represented to some degree within the TSM index. It was not clear from the search results whether the REIT index was partially or fully contained within TSM, however. I was also unable to find any official documentation on Vanguard's website that lists the complete holdings of the two funds for comparison purposes.

In summary, to what degree is the Vanguard REIT index contained within the Vanguard total stock market index? If it is fully contained, then holding a separate REIT fund in addition to TSM almost seems like a sector bet to me rather than an additional asset class.

rkhusky
Posts: 5725
Joined: Thu Aug 18, 2011 8:09 pm

Re: Vanguard REIT index fully contained within TSM index?

Post by rkhusky » Fri Oct 17, 2014 10:42 am

I would guess that the vast majority of REIT index holdings are in the TSM index. You can find the list of holdings on Vanguard's web site by clicking on Portfolio and Management and then on Portfolio holdings near the bottom of the page. It is a bit tedious in that the web site only shows 50 at a time, but you should be able to get a full list in the annual report.
Note that TSM has 3772 stocks, while the CRSP index that it tracks has 3792.

asif408
Posts: 1478
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Vanguard REIT index fully contained within TSM index?

Post by asif408 » Fri Oct 17, 2014 10:48 am

hudson4351,

Based on Morningstar's portfolio viewer, it appears that Vanguard's TSM is ~3.5% REITs. I'm not sure if it exactly matches the fund, but I would assume it would be close even if it didn't exactly match.
hudson4351 wrote:If it is fully contained, then holding a separate REIT fund in addition to TSM almost seems like a sector bet to me rather than an additional asset class.
You've shaken the hornet's nest. I can hear the hornets buzzing inside ready to get out. :D

There is a never ending debate on whether REITs are an asset class or a sector (you may have just started one). I suggest you google "are reits an asset class" into the Bogleheads search bar. You'll find plenty of previous posts that provide arguments for both sides. Instead of arguing for one side or the other, I suggest you read the forums and the pros/cons of holding a seperate REIT allocation, and then decide if it is something you want. This is one of those areas where there is no consensus among Bogleheads, but plenty of opinions. :D

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