Please help me understand my Xray morningstar box

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JB2013
Posts: 86
Joined: Mon Sep 12, 2016 1:04 pm

Please help me understand my Xray morningstar box

Post by JB2013 » Thu Apr 20, 2017 3:30 pm

So I've done some reading about utilizing this xray Morningstar box, and I recall seeing the "preferred box" somewhere online, but now I can't find it. I think my numbers now mostly reflect what I was trying to copy. I'm wondering if these are "good" numbers to have and if I should look into any changes. Here's my box below...

Current investments for my 401K:

VINIX 72%
VIPSX 15%
VSGIX 8%
VMCIX 5% These holdings create this box...

Value Core Growth
25 25 24 Large
6 7 7 Medium
1 1 3 Small

What do you guys think? I'm not really sure how to interpret this. Thanks!

dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Please help me understand my Xray morningstar box

Post by dbr » Thu Apr 20, 2017 4:39 pm

JB2013 wrote:So I've done some reading about utilizing this xray Morningstar box, and I recall seeing the "preferred box" somewhere online, but now I can't find it. I think my numbers now mostly reflect what I was trying to copy. I'm wondering if these are "good" numbers to have and if I should look into any changes. Here's my box below...

Current investments for my 401K:

VINIX 72%
VIPSX 15%
VSGIX 8%
VMCIX 5% These holdings create this box...

Value Core Growth
25 25 24 Large
6 7 7 Medium
1 1 3 Small

What do you guys think? I'm not really sure how to interpret this. Thanks!
Put in a total market fund for a comparison and notice that you are under weight small caps relative to the market and a little overweight to growth in small caps.

More to the point, what is your rationale in picking that allocation to funds that you have?

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White Coat Investor
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Re: Please help me understand my Xray morningstar box

Post by White Coat Investor » Thu Apr 20, 2017 4:39 pm

A little large cap heavy.
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JB2013
Posts: 86
Joined: Mon Sep 12, 2016 1:04 pm

Re: Please help me understand my Xray morningstar box

Post by JB2013 » Thu Apr 20, 2017 4:42 pm

dbr wrote:
JB2013 wrote:So I've done some reading about utilizing this xray Morningstar box, and I recall seeing the "preferred box" somewhere online, but now I can't find it. I think my numbers now mostly reflect what I was trying to copy. I'm wondering if these are "good" numbers to have and if I should look into any changes. Here's my box below...

Current investments for my 401K:

VINIX 72%
VIPSX 15%
VSGIX 8%
VMCIX 5% These holdings create this box...

Value Core Growth
25 25 24 Large
6 7 7 Medium
1 1 3 Small

What do you guys think? I'm not really sure how to interpret this. Thanks!
Put in a total market fund for a comparison and notice that you are under weight small caps relative to the market and a little overweight to growth in small caps.

More to the point, what is your rationale in picking that allocation to funds that you have?
My rationale is I want 15% in bonds. In regards to the percentages of large/mid/small caps...I have no idea. Like I mentioned, I think I based it off a box I saw a while ago, so it looks like I will have to tinker with the percentages to get large caps down and small caps up.

dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Please help me understand my Xray morningstar box

Post by dbr » Thu Apr 20, 2017 4:45 pm

A much better idea would be to just buy a total stock market index fund.

The more likely area for diversification would be to add a total international stock market index fund.

Picking funds is premature if you haven't thought through your asset allocation to start with. Is this in a retirement plan that does not offer a total market index fund?

JB2013
Posts: 86
Joined: Mon Sep 12, 2016 1:04 pm

Re: Please help me understand my Xray morningstar box

Post by JB2013 » Thu Apr 20, 2017 5:03 pm

dbr wrote:A much better idea would be to just buy a total stock market index fund.

The more likely area for diversification would be to add a total international stock market index fund.

Picking funds is premature if you haven't thought through your asset allocation to start with. Is this in a retirement plan that does not offer a total market index fund?
Correct. This is in a retirement fund that doesn't have a total stock. These are the best index funds I get to play with so that's why I posted on the board. I want 15% bonds so I'm looking for suggestions on how to allocate the funds I'm given.

dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Please help me understand my Xray morningstar box

Post by dbr » Thu Apr 20, 2017 5:14 pm

There are some postings somewhere giving a selection of S&P 500, midcap index, and smallcap index that matches TSM. Maybe at this point it would help to post what is available in your plan and people will have good suggestions. I would think the best idea is to target a three fund portfolio concept using what you have available. You should still put VTI in the M* x-ray to see what the TSM construction should look like.

Honestly, it is also perfectly reasonable to just hold the S&P 500 and forget about it, excepting maybe previously mentioned holding some international.

Here is another thread in the same vein: viewtopic.php?f=1&t=217071

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whaleknives
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Re: Please help me understand my Xray morningstar box

Post by whaleknives » Thu Apr 20, 2017 5:21 pm

JB2013 wrote:So I've done some reading about utilizing this xray Morningstar box, and I recall seeing the "preferred box" somewhere online, but now I can't find it. I think my numbers now mostly reflect what I was trying to copy. I'm wondering if these are "good" numbers to have and if I should look into any changes. . . What do you guys think? I'm not really sure how to interpret this. Thanks!
I don't think there's a "preferred" stock style box, because the style box is a way of summarizing the diversification of your stock portfolio. It's an easy way to compare your actual portfolio to some standard; for example, if you wanted to approximate the Vanguard Total Stock Market fund, you could compare your stock portfolio style box (left) to the the Total Stock fund (VTSMX, right):

ImageImage

And we see that your portfolio tilts slightly large compared to Total Stock.

When it comes to your bonds, the bond style box is not as helpful. If I compare your TIPS to Vanguard Total Bond fund, the boxes only tell us that both funds are high quality, but the TIPS have "Extensive" sensitivity to interest rates with a duration of 7.88 years, while Total Bond has a "Moderate" sensitivity with a duration of 6.09 years. I think it's more helpful to compare the growth charts:

Image

This shows us that the two funds have similar returns over 10 years, with your TIPS being a little more volatile.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 8/17/07) ☕ Maritime signal flag W - Whiskey: "I require medical assistance."

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whaleknives
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Re: Please help me understand my Xray morningstar box

Post by whaleknives » Thu Apr 20, 2017 5:49 pm

Take a look at these portfolios for Approximating total stock market. If you used VINIX 69%, VMCIX 3%, and VSGIX 13% for the 85% stock in your portfolio, you would come closer to Total Stock, if that's what you want.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 8/17/07) ☕ Maritime signal flag W - Whiskey: "I require medical assistance."

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