Draft Portfolio Check - From 34 down to 8 funds

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Topic Author
fundmental
Posts: 2
Joined: Thu Nov 22, 2018 11:52 am

Draft Portfolio Check - From 34 down to 8 funds

Post by fundmental »

I am new to the Boglehead forum, but I’ve been a Bogle follower for a long time. My retirement portfolio is with Vanguard and consists of a SEP-IRA (which I try to max out each year) and a rollover IRA. Over the years, I have been able to stick with my target asset allocation and tilt towards value. I did this despite having 34 funds between the two IRA’s. I finally got to simplifying this to make management easier.

I used the awesome Portfolio Tester tool on Vanguard’s website to reduce my portfolio from 34 funds to 8 while sticking close to my allocation target. The comparison report shows that my average expense ratio improves from .14% to .10% . I’d like your feedback on this new portfolio, as I plan to stick with this for a while and rebalance over the time horizon I have (15-20 years).

One Question/Concern:
My past bond holdings were divided between Short Term Index (VBIRX) and TIPS (VIPSX). Now my plan is to hold the total bond market fund, and this was done to simplify my portfolio. This was one area I had concern with given the increased interest rate sensitivity but I am not sure how others felt about the total bond fund.

Other information: I don’t include other assets in my retirement portfolio, although I have a vacation property which I plan to move into come “retirement”.

My Draft Portfolio (from 34 down to 8 funds).

SEP-IRA (added to each year)
Vanguard Total Stock Market Fund 20.15%
Vanguard Total International Stock Market Fund 15.00% (replaces VPADX, VEURX among others)
Vanguard Total Bond Market Fund 20.00%
Vanguard High Dividend 13.00%
Vanguard Morgan Growth Fund 10.00% (my one actively managed fund; growth index fund VIGAX could replace)

ROLLOVER-IRA (used for additional tilt in small caps and REIT's)
Real Estate Index Admiral 5.00%
Small-Cap Growth Index Admiral 5.00%
Small-Cap Value Index Admiral 5.00%

CASH 6.85%
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by PFInterest »

i wouldnt worry about the TIPS/short term bonds. you are 80% stock, so thats plenty of inflation protection.
you dont need those other two funds in your SEP (you know which ones).
also why tilt separate SCG and SCV? unnecessary again.
retiredjg
Posts: 41905
Joined: Thu Jan 10, 2008 12:56 pm

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by retiredjg »

You have made great progress.

If you want to do more, get rid of the High dividend and Morgan Growth (since they combine to make large cap blend which you already have in the Total Stock Market). And get rid of the small cap value and small cap growth since they combine to make small cap blend which is also already included in the total stock market.
ExitStageLeft
Posts: 1938
Joined: Sat Jan 20, 2018 4:02 pm

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by ExitStageLeft »

Welcome to the forum!

Simple is good. The lazy three-fund portfolio using low-cost indexed funds is amazingly potent given its elegant simplicity.

Here's a comparison for you to consider:

https://www.portfoliovisualizer.com/bac ... on9_1=6.85

I don't consider performance when looking at a backtest, other than to note that you got the same performance since 2012 with the three funds as you did with the 8 fund portfolio. The value in PortfolioVisualizer for me is the peek it gives you in the Exposures tab. You can get very similar diversification with only three funds.
Topic Author
fundmental
Posts: 2
Joined: Thu Nov 22, 2018 11:52 am

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by fundmental »

Thanks for the replies! I am considering trimming out the Morgan Growth and Dividend funds in my SEP IRA. I still want more small cap exposure than what VTSAX offers so that is why I put the SC funds in my rollover, especially the SC value.

Thank you ExitStageLeft for the portfolio visualizer analysis. I did in fact start by using the lazy 3 or 4 fund portfolio as my baseline. Great info in there!
lifeisinmirrors
Posts: 128
Joined: Fri Jul 06, 2018 6:15 pm

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by lifeisinmirrors »

To simplify things further: If that rollover IRA is not a Roth, look into transferring that into the SEP IRA. If you can do a trustee-to-trustee transfer, there aren't any tax consequences.
bdpb
Posts: 1617
Joined: Wed Jun 06, 2007 3:14 pm

Re: Draft Portfolio Check - From 34 down to 8 funds

Post by bdpb »

fundmental wrote: Fri Nov 23, 2018 4:07 pm Thanks for the replies! I am considering trimming out the Morgan Growth and Dividend funds in my SEP IRA. I still want more small cap exposure than what VTSAX offers so that is why I put the SC funds in my rollover, especially the SC value.
I agree with trimming those two funds and increasing SCV. You could also trim the SCG fund and change the bonds to Intermediate Treasuries.

If you did these, you would be aligned with a significant following on this forum.
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