Feedback requested on approximating total stock market

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Topic Author
olliema
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Feedback requested on approximating total stock market

Post by olliema » Sun Oct 21, 2018 10:15 pm

(preface: I've read the Wiki on approximating the total stock market https://www.bogleheads.org/wiki/Approxi ... ock_market)

I'm intending to emulate the Total US Stock Market for a portion of my portfolio which does not have Vanguard Total Stock Market as an option.

The portfolio will be spread between Vanguard-administrated 401k as well as direct tIRA and Roth IRA accounts and an employer 401k.

These 401ks don't offer a VTSAX option. (The direct tIRA and Roth that I'm rolling over to Vanguard can use VTSAX)

I ran two fund mixes that I CAN create for these 401ks through Morninstar Instant X-Ray and the #'s generally align to VTSAX.

I am interested if you concur these mixes are viable substitutes for VTSAX, or if you would switch the mix/ratios. Thank you

Option 1
80% VIIIX - Vanguard Institutional Index Fund Institutional Plus Shares
10% VMCPX - Vanguard Mid-Cap Index Fund Institutional Plus Shares
10% VSGIX - Vanguard Small-Cap Growth Index Fund Institutional Shares
Image

Option 2
80% VIIIX - Vanguard Institutional Index Fund Institutional Plus Shares
20% VEXMX - Vanguard Extended Market Index Fund Investor Shares
Image

Benchmark - 100% VTSAX - Vanguard Total Stock Market
Image

Original post with the larger goal is here
viewtopic.php?f=1&t=261538&p=4168438#p4168438
Last edited by olliema on Mon Oct 22, 2018 3:57 pm, edited 1 time in total.

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cheese_breath
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Re: Feedback requested on approximating total stock market

Post by cheese_breath » Sun Oct 21, 2018 10:41 pm

Do the 401Ks offer a S&P 500 index option? That's close enough IMO.
The surest way to know the future is when it becomes the past.

Topic Author
olliema
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Re: Feedback requested on approximating total stock market

Post by olliema » Sun Oct 21, 2018 10:46 pm

Hi - thanks for reading - they both offer VIIIX which Vanguard says "seeks to track the performance of the Standard & Poor’s 500 Index, which measures the investment return of large-capitalization stocks". I am trying to get the whole market hence trying to add Mid and Small Cap.

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JoMoney
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Re: Feedback requested on approximating total stock market

Post by JoMoney » Sun Oct 21, 2018 11:55 pm

I would think those are all viable substitutes to represent the 'Total Market'... including, as cheese_breath mentioned, just using a S&P 500 fund.
You're not likely to match some other fund perfectly, there are minor differences even among various 'Total Market' indexes like the Russell 3000, WIlshire 5000, CRSP US Total Market, etc...
If you're interest was to track one of the benchmarks precisely, the S&P 500 is a more widely available index that's easier to track.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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FiveK
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Re: Feedback requested on approximating total stock market

Post by FiveK » Mon Oct 22, 2018 12:33 am

Option #2 is simpler and a better match.

Not surprising, as VEXMX "is considered a complement to Vanguard 500 Index Fund. Together they provide exposure to the entire U.S. equity market." (quote from Vanguard's description of that fund)

Northern Flicker
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Re: Feedback requested on approximating total stock market

Post by Northern Flicker » Mon Oct 22, 2018 12:55 am

+1 don’t get too hung up on precisely matching the M* style box numbers. They will differ slightly due to rounding errors and they may not be using portfolio descriptions from the same closing date for all funds.

As FiveK noted, VEXMX is the market completion index for the S&P500. At any point in time, you would be able to construct the total market by combining those two. Once the market weight ratio between the two is set, you should not need to rebalance them to maintain market weight.

Tax qualified accounts often hold these separate funds as some people may want to hold the market portfolio, but others may wish to tilt toward the small and mid cap holdings of VEXMX.
Index fund investor since 1987.

Topic Author
olliema
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Re: Feedback requested on approximating total stock market

Post by olliema » Mon Oct 22, 2018 6:13 am

Thanks all for good ideas.

I'd end up using both "Option 1" for my 401k w/ 80% of my assets (this plan doesn't offer VEXMX), and "Option 2" at my current employer's 401k which has about 20% of my assets and does offer VEXMX.

Or, I could roll the Vanguard managed 401k into the other one and it all in "Option 2" 80% VIIIX 20% VEXMX.

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BL
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Re: Feedback requested on approximating total stock market

Post by BL » Mon Oct 22, 2018 7:10 am

Do you have a choice of managed or not? What are extra charges? Looks like excellent fund choices. If your current 401k is low-cost, consider rolling into that. Otherwise, no rush as other one probably fine as well, assuming other good funds.

You could look at everything as one portfolio and balance that way. Maybe a single fund in some accounts, for example.

A Target fund is also a good option. Keep it simple!

Northern Flicker
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Re: Feedback requested on approximating total stock market

Post by Northern Flicker » Mon Oct 22, 2018 2:12 pm

olliema wrote:
Mon Oct 22, 2018 6:13 am
Thanks all for good ideas.

I'd end up using both "Option 1" for my 401k w/ 80% of my assets (this plan doesn't offer VEXMX), and "Option 2" at my current employer's 401k which has about 20% of my assets and does offer VEXMX.

Or, I could roll the Vanguard managed 401k into the other one and it all in "Option 2" 80% VIIIX 20% VEXMX.
Hold VIIIX or other SP500 fund in the plan with 80% of your assets, and hold VEXMX in the plan with 20% of your assets. Hold bonds in both plans at your asset allocation bond percentage.
Index fund investor since 1987.

Topic Author
olliema
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Re: Feedback requested on approximating total stock market

Post by olliema » Mon Oct 22, 2018 3:58 pm

Hey a quick correction on my part - I used the term "managed" intending to mean one of the two plans is administered by Vanguard. It is not actively managed, so therefore the cost is low - I think $10 per quarter or something.
BL wrote:
Mon Oct 22, 2018 7:10 am
Do you have a choice of managed or not? What are extra charges? Looks like excellent fund choices. If your current 401k is low-cost, consider rolling into that. Otherwise, no rush as other one probably fine as well, assuming other good funds.

You could look at everything as one portfolio and balance that way. Maybe a single fund in some accounts, for example.

A Target fund is also a good option. Keep it simple!

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