Small, Mid, and Large Cap Allocation Calculation

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oinkyboinky
Posts: 71
Joined: Thu Apr 16, 2015 2:14 pm

Small, Mid, and Large Cap Allocation Calculation

Postby oinkyboinky » Thu Jun 08, 2017 11:04 pm

I hold the following funds:

401k - $7,348 T. Rowe Price Equity Index 500 (PREIX)

Roth IRA - $17,484 Vanguard Total International Stock Index (VTIAX)

IRA - $3,777 Vanguard Intermediate-Term Bond Index Fund (VBIIX) + $13,582 Vanguard 500 Index Fund (VTSAX) = $17,359

Total = $42,191k

Questions:

1. How do I figure out the ratio of small, mid, and large cap domestic stocks (relative to the total)?

I assume it's SmallCapDollarAmount\Total, MidCapDollarAmount\Total, etc., but where can I find the ratio for each of PREIX and VTIAX individually to find out the dollar amount I hold?

2. Whats the preferred allocation for one with high risk tolerance if one is going to differentiate between l\m\s cap stocks? I read 30% large, 20% medium, 20% small, 20% international, and 10% bonds, which sounds reasonable, but am curious if there is any common advice here.

3. Is it advisable to break ones international holdings out into large, medium, and small cap as well?

Thank you for any help!

TropikThunder
Posts: 409
Joined: Sun Apr 03, 2016 5:41 pm

Re: Small, Mid, and Large Cap Allocation Calculation

Postby TropikThunder » Thu Jun 08, 2017 11:25 pm

oinkyboinky wrote:I hold the following funds:

401k - $7,348 T. Rowe Price Equity Index 500 (PREIX)

Roth IRA - $17,484 Vanguard Total International Stock Index (VTIAX)

IRA - $3,777 Vanguard Intermediate-Term Bond Index Fund (VBIIX) + $13,582 Vanguard 500 Index Fund (VTSAX) = $17,359

Total = $42,191k

Questions:

1. How do I figure out the ratio of small, mid, and large cap domestic stocks (relative to the total)?

I assume it's SmallCapDollarAmount\Total, MidCapDollarAmount\Total, etc., but where can I find the ratio for each of PREIX and VTIAX individually to find out the dollar amount I hold?

2. Whats the preferred allocation for one with high risk tolerance if one is going to differentiate between l\m\s cap stocks? I read 30% large, 20% medium, 20% small, 20% international, and 10% bonds, which sounds reasonable, but am curious if there is any common advice here.

3. Is it advisable to break ones international holdings out into large, medium, and small cap as well?

Thank you for any help!

1. Put your fund amounts into the Instant X-Ray tool at Morningstar:
http://portfolio.morningstar.com/Rtport ... aspx?dt=36

There's a column for Ticker Symbol and a drop-down to change between "Holding Value" and "Percentage Value." Since you've listed them dollar amounts above, just use that rather then converting to %. When you've entered them all, click "Show Instant X-Ray". M* glitches every now and then, so if the boxes are all zeros, click on "Edit Holdings" and "Show Instant X-Ray" again. Voila! Morningstar Style Box. If you click on Stock Style Diversification above the style boxes it will give you the style boxes for each fund. I can't upload a screen shot for some reason, but I'll put on my teacher's hat and give you homework: The Large Cap breakdown of your portfolio is 28/26/24. I'll leave it to you to get the other numbers. :twisted:

As for preferred allocation, I'll let others chime in since I just hold the total market as is (no tilts).

CFR
Posts: 38
Joined: Sun Jan 22, 2017 1:35 pm

Re: Small, Mid, and Large Cap Allocation Calculation

Postby CFR » Fri Jun 09, 2017 12:48 am

If you indicate
1. The fund tickers you want to use.
2. The morningstar style box you want i.e. VTI Vanguard Total market or tilt.
Let say you want a style box such as.
23 25 23
06 06 06
02 02 02

I will calculate the ratio's for you. I set up a Matlab code to do just that and use it in my 401k

CFR

oinkyboinky
Posts: 71
Joined: Thu Apr 16, 2015 2:14 pm

Re: Small, Mid, and Large Cap Allocation Calculation

Postby oinkyboinky » Sun Jun 11, 2017 2:12 pm

CFR wrote:If you indicate
1. The fund tickers you want to use.
2. The morningstar style box you want i.e. VTI Vanguard Total market or tilt.
Let say you want a style box such as.
23 25 23
06 06 06
02 02 02

I will calculate the ratio's for you. I set up a Matlab code to do just that and use it in my 401k

CFR


1. The $ amount\tickers would be:

7614.93 - (PREIX)

17324.80 - (VTIAX)

3767.53 (VBIIX)

13564.33 (VTSAX)

2. I don't fully understand the style box. All numbers need to add to 100, correct?

If I use the instant x-ray tool with these values, the box is:

28 26 24
6 6 5
2 2 2

Does that mean, considering only stocks (i.e., not including the VBIIX bond fund), I have:

28 + 26 + 24 = 78% large cap stocks
6 + 6 + 5 = 17% mid
2 + 2 + 2 = 6% small

(Sums to 101?)

If I follow the (30% large, 20% medium, 20% small, 20% international, and 10% bonds) strategy, then I think the rows of the box should add up like this:

A + B + C = 42
D + E + F = 29
G + H + I = 29

I got 42, 29, and 29 since small cap would be 2/7 = 29% , mid 2/7 = 29%, and large 3/7 = 42% (if we just consider stocks):

[bonds\international stocks] + [small, mid, and large cap domestic stocks]

[B I I] + [S S M M L L L]


Can we use your Matlab code to see how I should adjust the dollar amounts to get the columns to add up like that?

Thank you for your help.

livesoft
Posts: 55037
Joined: Thu Mar 01, 2007 8:00 pm

Re: Small, Mid, and Large Cap Allocation Calculation

Postby livesoft » Sun Jun 11, 2017 2:15 pm

I like to break my international into L, M, S, too.

I don't use spreadsheets, but do use online tools as described in this thread:
viewtopic.php?t=150267

One doesn't need an exact allocation, so getting to a desired AA by trial-and-error is fine. See the thread I linked.
This signature message sponsored by sscritic: Learn to fish.

CFR
Posts: 38
Joined: Sun Jan 22, 2017 1:35 pm

Re: Small, Mid, and Large Cap Allocation Calculation

Postby CFR » Sun Jun 18, 2017 7:35 pm

oinkyboinky wrote:
1. The $ amount\tickers would be:

7614.93 - (PREIX)

17324.80 - (VTIAX)

3767.53 (VBIIX)

13564.33 (VTSAX)

2. I don't fully understand the style box. All numbers need to add to 100, correct?

If I use the instant x-ray tool with these values, the box is:

28 26 24
6 6 5
2 2 2

Does that mean, considering only stocks (i.e., not including the VBIIX bond fund), I have:

28 + 26 + 24 = 78% large cap stocks
6 + 6 + 5 = 17% mid
2 + 2 + 2 = 6% small

(Sums to 101?) Yes. On the vertical is Value Blended and Growth from left to right



If I follow the (30% large, 20% medium, 20% small, 20% international, and 10% bonds) strategy, then I think the rows of the box should add up like this:

A + B + C = 42
D + E + F = 29
G + H + I = 29

I got 42, 29, and 29 since small cap would be 2/7 = 29% , mid 2/7 = 29%, and large 3/7 = 42% (if we just consider stocks):

[bonds\international stocks] + [small, mid, and large cap domestic stocks]

[B I I] + [S S M M L L L]


Can we use your Matlab code to see how I should adjust the dollar amounts to get the columns to add up like that?


Yes, but you would need to be more specific. For example looking at only large cap stocks at 42% of your portfolio, you might specify in regards to your style box:
15 15 12 meaning 15% large cap value, 15% large cap blended, and finally 12% large cap growth.

I have typically handled the domestic stock separate from the international. In other words, I have used domestic stock funds in my 401K to mimic the Vanguard total market. International would be it's own style box. At least that is how I have applied my asset allocations.

So again, you need to specify:
1. Style box values you would like.
2. Funds you have available, or want to use.

If I were to extrapolate your above values (example only) your desired style might be:
15 15 12
09 09 11
11 09 09

Now be advised that you can easily come up with a style box that your selected funds cannot fulfill. For example if you had zero small cap funds available, then you cannot obviously create a portfolio representing the bottom row. But if you have available a small cap value, and a small cap fund available, then the lowest row probably could be created.

By the way,
PREIX style box is:
29 29 28
05 05 03
00 00 00

VTSAX style box is:
24 25 23
06 06 06
03 03 03

So for domestic stock, you really have no ability to tilt. You need a small cap fund, and a mid cap fund to do what you would like to do.
Adding
VSMAX with a style box of
00 00 00
09 13 20
20 20 19

You may be able closer to getting what you would like.




Thank you for your help.


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