What about small/mid caps?

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Topic Author
Mtangler25
Posts: 171
Joined: Mon Jul 10, 2017 7:44 pm
Location: Montana

What about small/mid caps?

Post by Mtangler25 » Mon Apr 22, 2019 1:00 pm

Hello,

I have some questions regarding choice of mutual funds, specifically which type of Growth funds I should be in. I have a Roth with a 3 fund portfolio strategy (technically its 4 funds because I own a dividend ETF as well)

However, i am more asking this for my employer sponsored account. I have taken a different approach, I currently have only one fund as I have just started with my eligibility. I currently have TRBCX which is the T Rowe Price Blue Chip Growth Fund, I like the fund and find it to be fairly aggressive with above market returns. I am curious about adding a Mid-Small Cap mutual fund to diversify away from all of the big "blue chip" companies that are held in TRBCX. I don't want to over own the same companies across multiple funds and since I am only 25 I feel like I have a higher amount of risk tolerance.

I understand that this is going against the recommended 3-fund portfolio but since i already have that in my Roth, should I venture into a different style of funds for my SIMPLE IRA?

What are some of your recommendations and views when considering mid cap/small cap funds?

Thank you in advance!

carmonkie
Posts: 154
Joined: Fri Jun 29, 2018 4:31 pm

Re: What about small/mid caps?

Post by carmonkie » Mon Apr 22, 2019 1:28 pm

TRBCX only contains 122 stocks. Part of the success of this fund is due to holding 10% on Amazon and 43% of the fund assets are held in 10 companies which are mostly technology. Prior to 2011 it was closely correlated to the S&P 500. I think your strategy to diversify is contradictory to what this fund is doing.

Maybe adding the extended Market would give you the other 20% of the funds that the S&P 500 does not contain which are mid-caps and small caps.

Topic Author
Mtangler25
Posts: 171
Joined: Mon Jul 10, 2017 7:44 pm
Location: Montana

Re: What about small/mid caps?

Post by Mtangler25 » Mon Apr 22, 2019 2:49 pm

carmonkie wrote:
Mon Apr 22, 2019 1:28 pm
TRBCX only contains 122 stocks. Part of the success of this fund is due to holding 10% on Amazon and 43% of the fund assets are held in 10 companies which are mostly technology. Prior to 2011 it was closely correlated to the S&P 500. I think your strategy to diversify is contradictory to what this fund is doing.

Maybe adding the extended Market would give you the other 20% of the funds that the S&P 500 does not contain which are mid-caps and small caps.
Thank you for your response, I should have looked more closely at the holdings before I posted the question.

When you say "adding the extended market" are you referring to adding an S&P 500 index and or total market index? I appreciate your help.

ExitStageLeft
Posts: 1642
Joined: Sat Jan 20, 2018 4:02 pm

Re: What about small/mid caps?

Post by ExitStageLeft » Mon Apr 22, 2019 3:39 pm

An extended market fund such as Vanguard's VEXAX is designed to complement a portfolio that has an S&P 500 fund rather than a total stock market fund. It is an index of mid and small cap stocks.

RetiredCSProf
Posts: 296
Joined: Tue Feb 28, 2017 4:59 pm

Re: What about small/mid caps?

Post by RetiredCSProf » Tue Apr 23, 2019 12:28 am

If you want to hold the "market cap" in mid- to small-caps then invest 20% of your US equities in this category.

Consider: TRowe Diversified Mid-Cap Growth (PRDMX)

TRowe also has an Extended Equity Market Index Fund (PEXMX), which is a mid-cap blend

The following mid-cap and small-cap TRowe funds (which I currently hold) are closed to new investors:
- New Horizons (PRNHX)
- Mid-Cap Growth (RPMGX)
- Mid-Cap Value (TRMCX)
- Intn'l Discovery (PRIDX)
Since this is through your employer, it's possible that one ore more of the closed funds may be open to you.

Living Free
Posts: 351
Joined: Thu Jul 19, 2018 7:31 pm

Re: What about small/mid caps?

Post by Living Free » Tue Apr 23, 2019 4:01 pm

Mtangler25 wrote:
Mon Apr 22, 2019 1:00 pm
Hello,

I have some questions regarding choice of mutual funds, specifically which type of Growth funds I should be in. I have a Roth with a 3 fund portfolio strategy (technically its 4 funds because I own a dividend ETF as well)

However, i am more asking this for my employer sponsored account. I have taken a different approach, I currently have only one fund as I have just started with my eligibility. I currently have TRBCX which is the T Rowe Price Blue Chip Growth Fund, I like the fund and find it to be fairly aggressive with above market returns. I am curious about adding a Mid-Small Cap mutual fund to diversify away from all of the big "blue chip" companies that are held in TRBCX. I don't want to over own the same companies across multiple funds and since I am only 25 I feel like I have a higher amount of risk tolerance.

I understand that this is going against the recommended 3-fund portfolio but since i already have that in my Roth, should I venture into a different style of funds for my SIMPLE IRA?

What are some of your recommendations and views when considering mid cap/small cap funds?

Thank you in advance!
Do you have good bond options in your employer sponsored retirement account? Generally I'd favor doing the bonds in there rather than in your Roth IRA.

Topic Author
Mtangler25
Posts: 171
Joined: Mon Jul 10, 2017 7:44 pm
Location: Montana

Re: What about small/mid caps?

Post by Mtangler25 » Tue Apr 23, 2019 9:05 pm

Living Free wrote:
Tue Apr 23, 2019 4:01 pm
Mtangler25 wrote:
Mon Apr 22, 2019 1:00 pm
Hello,

I have some questions regarding choice of mutual funds, specifically which type of Growth funds I should be in. I have a Roth with a 3 fund portfolio strategy (technically its 4 funds because I own a dividend ETF as well)

However, i am more asking this for my employer sponsored account. I have taken a different approach, I currently have only one fund as I have just started with my eligibility. I currently have TRBCX which is the T Rowe Price Blue Chip Growth Fund, I like the fund and find it to be fairly aggressive with above market returns. I am curious about adding a Mid-Small Cap mutual fund to diversify away from all of the big "blue chip" companies that are held in TRBCX. I don't want to over own the same companies across multiple funds and since I am only 25 I feel like I have a higher amount of risk tolerance.

I understand that this is going against the recommended 3-fund portfolio but since i already have that in my Roth, should I venture into a different style of funds for my SIMPLE IRA?

What are some of your recommendations and views when considering mid cap/small cap funds?

Thank you in advance!
Do you have good bond options in your employer sponsored retirement account? Generally I'd favor doing the bonds in there rather than in your Roth IRA.


It is through TD ameritrade, so I can choose any fund I want. I am able to purchase Trowe Price funds for no commission. I have not found a fund family that I am as comfortable with and as confident in than TROWE, that have no transaction fund.

Living Free
Posts: 351
Joined: Thu Jul 19, 2018 7:31 pm

Re: What about small/mid caps?

Post by Living Free » Tue Apr 23, 2019 9:41 pm

I'm not too familiar with T Rowe Price but a quick look at the bond mutual funds shows lowest expense ratios around 0.2%. Is that what you see also?

Do you have access to any fund you want from any brokerage within your employer sponsored plan? Can you post a list of your available bond funds?

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