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Feedback requested on approximating total stock market

Posted: Sun Oct 21, 2018 10:15 pm
by olliema
(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
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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

Re: Feedback requested on approximating total stock market

Posted: Sun Oct 21, 2018 10:41 pm
by cheese_breath
Do the 401Ks offer a S&P 500 index option? That's close enough IMO.

Re: Feedback requested on approximating total stock market

Posted: Sun Oct 21, 2018 10:46 pm
by olliema
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.

Re: Feedback requested on approximating total stock market

Posted: Sun Oct 21, 2018 11:55 pm
by JoMoney
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.

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 12:33 am
by FiveK
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)

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 12:55 am
by Northern Flicker
+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.

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 6:13 am
by olliema
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.

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 7:10 am
by BL
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!

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 2:12 pm
by Northern Flicker
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.

Re: Feedback requested on approximating total stock market

Posted: Mon Oct 22, 2018 3:58 pm
by olliema
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!