What tilt(s) have you adopted?

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Sirjames
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What tilt(s) have you adopted?

Post by Sirjames » Sat Jul 20, 2019 11:39 am

First and foremost, I tilt to stocks/equities index funds-- currently 100% of my portfolio. I am 32 years old. I'm personally comfortable with no fixed income [other than emergency fund] until likely age 40.

I tilt to Small+Mid Cap (Domestic and International), International, and EM within International.

I consider my portfolio to be a relative middle-ground (not exactly) between world stock market-cap, extreme-tilting (ie 100% small cap value as domestic holding), and a more US-centric/Jack Bogle portfolio (ie 80-100% total US, 0-20% total international).

My Overall Portfolio (6 family accounts):
Overall cap weights:
56.7% large cap (VG's Total World ETF "VT" has 77%)
23.9% mid cap (VT has 18%)
19.4% small cap (VT has 6%)

66.7% US (VT has 52%)
-->55% large cap (VTI has 75%)
-->22.5% mid cap (VTI has 18%)
-->22.5% small cap, with a small value tilt, which I hope to increase in time (VTI has 9% small-cap)

33.3% International (VT has 48%)
-->61% large cap (VXUS has 80%)
-->27% mid cap (VXUS has 17%)
-->13% small cap (VXUS has 4%)

-->70% developed (VXUS has 82%)
-->30% EM (VXUS has 18%)

I don't know if my tilts are large enough to make a significant difference, but this plan allows me to sleep well knowing that I'm set up for success if either side of this debate does well. Debate being, custom tilting versus investing all in 3 fund portfolio or VT etc. Even if just one of these tilts does significantly better, and I dilute that by having multiple tilts, I have less FOMO. Of course, if all of my tilts do poorly, that would be unfortunate..but I'm OK with that.

PS. I used to tilt toward REITs as well, but discontinued that after much consideration of arguments made on the forum. Commentary at viewtopic.php?t=203059 sold me that REIT investing is not for me:
CppCoder wrote:
Fri Nov 11, 2016 9:21 pm
Oddly enough, I am sort of coming to the conclusion that I don't like holding a REIT fund, but I came to this conclusion when the fund was peaking over the summer. I contribute to bonds in my 401k, stocks in my taxable, and REITs in my IRA; I rebalance with new money; my REIT target is 7% of my portfolio (10% of stocks in a 70/30 AA). I found that I am contributing so much to my 401k and taxable, that I was triggering my buying rebalancing band for the REIT when it was up 18% for the year this summer. I max my IRA every year, contribute it all to the REIT, and even when the REIT outperforms every other asset, my IPS says I'm supposed to buy more. That's not how rebalancing is supposed to work :(. I haven't decided if I'm going to simply exchange the REIT for total market and be done with it or just leave the existing fund alone and stop trying to rebalance it, which would essentially defeat my reason for owning it in the first place. I know, first world problem...
What do you think? How do you tilt?
Patience is the ultimate hedge

aristotelian
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Re: What tilt(s) have you adopted?

Post by aristotelian » Sat Jul 20, 2019 12:02 pm

To me the most compelling is Low Volatility. If you can achieve the same average return but smooth out the bottom, that would reduce sequence of returns risk and perhaps allow for higher Safe Withdrawal Rate. Even if you give up some average return, I think it is probably worth it to reduce volatility. That said, I don't think they have been researched much and I do not have a strong tilt at the moment (just $5K in my Roth IRA).

The literature on Small Value is interesting, but if the premium can disappear for decades at a time it is too risky for me.

CppCoder
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Re: What tilt(s) have you adopted?

Post by CppCoder » Sat Jul 20, 2019 12:41 pm

Since I was quoted, I may as well reply. I ended up exchanging my REITs for a total market fund leaving me with a 70/30 portfolio distributed as a three fund portfolio. I really like the simplicity. My goal is not to win, it's to avoid losing. The three fund portfolio is the simplest asset allocation that accomplishes my goal.

Trader Joe
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Re: What tilt(s) have you adopted?

Post by Trader Joe » Sat Jul 20, 2019 1:00 pm

Sirjames wrote:
Sat Jul 20, 2019 11:39 am
First and foremost, I tilt to stocks/equities index funds-- currently 100% of my portfolio. I am 32 years old. I'm personally comfortable with no fixed income [other than emergency fund] until likely age 40.

I tilt to Small+Mid Cap (Domestic and International), International, and EM within International.

I consider my portfolio to be a relative middle-ground (not exactly) between world stock market-cap, extreme-tilting (ie 100% small cap value as domestic holding), and a more US-centric/Jack Bogle portfolio (ie 80-100% total US, 0-20% total international).

My Overall Portfolio (6 family accounts):
Overall cap weights:
56.7% large cap (VG's Total World ETF "VT" has 77%)
23.9% mid cap (VT has 18%)
19.4% small cap (VT has 6%)

66.7% US (VT has 52%)
-->55% large cap (VTI has 75%)
-->22.5% mid cap (VTI has 18%)
-->22.5% small cap, with a small value tilt, which I hope to increase in time (VTI has 9% small-cap)

33.3% International (VT has 48%)
-->61% large cap (VXUS has 80%)
-->27% mid cap (VXUS has 17%)
-->13% small cap (VXUS has 4%)

-->70% developed (VXUS has 82%)
-->30% EM (VXUS has 18%)

I don't know if my tilts are large enough to make a significant difference, but this plan allows me to sleep well knowing that I'm set up for success if either side of this debate does well. Debate being, custom tilting versus investing all in 3 fund portfolio or VT etc. Even if just one of these tilts does significantly better, and I dilute that by having multiple tilts, I have less FOMO. Of course, if all of my tilts do poorly, that would be unfortunate..but I'm OK with that.

PS. I used to tilt toward REITs as well, but discontinued that after much consideration of arguments made on the forum. Commentary at viewtopic.php?t=203059 sold me that REIT investing is not for me:
CppCoder wrote:
Fri Nov 11, 2016 9:21 pm
Oddly enough, I am sort of coming to the conclusion that I don't like holding a REIT fund, but I came to this conclusion when the fund was peaking over the summer. I contribute to bonds in my 401k, stocks in my taxable, and REITs in my IRA; I rebalance with new money; my REIT target is 7% of my portfolio (10% of stocks in a 70/30 AA). I found that I am contributing so much to my 401k and taxable, that I was triggering my buying rebalancing band for the REIT when it was up 18% for the year this summer. I max my IRA every year, contribute it all to the REIT, and even when the REIT outperforms every other asset, my IPS says I'm supposed to buy more. That's not how rebalancing is supposed to work :(. I haven't decided if I'm going to simply exchange the REIT for total market and be done with it or just leave the existing fund alone and stop trying to rebalance it, which would essentially defeat my reason for owning it in the first place. I know, first world problem...
What do you think? How do you tilt?
I think it is great that you are trying different investments allocations at your age. It really is a great learning experience. I did the same at your age. Now my portfolio is as simple as you can get. Best of luck.

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ruralavalon
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Re: What tilt(s) have you adopted?

Post by ruralavalon » Sat Jul 20, 2019 1:05 pm

Our portfolio uses just 4 funds.

We use a small-cap value tilt, only in domestic stocks.

For U.S. stocks we have:
1) 76% (75% target) Vanguard Total Stock Market Index Fund (VTSAX): and
2) 24% (25% target) Vanguard Small-cap Value Index Fund (VSIAX).

For stocks we have:
1) 77% (75% target) U.S. Stocks using the 2 funds stated above; and
2) 23% (25% target) Vanguard Total International Stock Index Fund (VTIAX).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

HawkeyePierce
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Re: What tilt(s) have you adopted?

Post by HawkeyePierce » Sat Jul 20, 2019 1:54 pm

I don't tilt in equities. Total domestic and international stock funds (with the exception of an S&P500 holding in taxable but close enough, it's not really a tilt). I've considered a small or value or low-vol tilt but haven't made any changes. I've also considered sector tilts towards utilities or healthcare but discarded that idea.

I do tilt in bonds though. My core holding is total US bond but I also have an allocation of long-term Treasuries for their historic diversification effect on equities. Aiming for about 5% of my total portfolio (which is 25% of my overall bond allocation).

CascadiaSoonish
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Re: What tilt(s) have you adopted?

Post by CascadiaSoonish » Sat Jul 20, 2019 3:30 pm

Two tilts. Within equities I have significant positions in ROBO and BOTZ as I expect automation and ML to continue to have a disproportionate impact on businesses in the future. They've underperformed the market in the past year or so but this is a long position. (Also admittedly not a tilt, strictly defined)

Second tilt is the proportion of local real estate in our overall portfolio.

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JoMoney
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Re: What tilt(s) have you adopted?

Post by JoMoney » Sat Jul 20, 2019 3:49 pm

I use an S&P 500 index fund, which tilts towards the large-cap U.S. market
"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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emlowe
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Re: What tilt(s) have you adopted?

Post by emlowe » Sat Jul 20, 2019 5:53 pm

I'm using Ferri Classic Core-4, so I'm tilted towards REITs, I suppose

40% TBM
7% REIT
36% Total US
17% Total International
Ferri Core 4: 40% Bonds | 6% Reit | 18% Total i18n | 36% Total US

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nisiprius
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Re: What tilt(s) have you adopted?

Post by nisiprius » Sat Jul 20, 2019 6:27 pm

My stock allocation is about 80% US, 20% international, so I have a US tilt. Mostly because I don't think it matters much, and I've been staying the course, and when I set that course that was about the mainstream recommendation.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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nedsaid
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Re: What tilt(s) have you adopted?

Post by nedsaid » Sat Jul 20, 2019 7:17 pm

Per Nisiprius above, I have a US Tilt. Just over 70% of my stocks and probably 90% of my bonds are United States. I also have a Mid/Small-Cap tilt in my portfolio. I have a mild Small/Value tilt as well.
A fool and his money are good for business.

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Taylor Larimore
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Re: What tilt(s) have you adopted?

Post by Taylor Larimore » Sat Jul 20, 2019 7:49 pm

What do you think? How do you tilt?
Sirjames:

When we moved our securities to Vanguard in 1986 we soon accumulated a portfolio of 15 Vanguard funds (I wrongly thought more funds meant lower risk and higher returns). I am now down to 2 broad market index funds and could not be happier with my portfolio's simplicity and improved performance.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

nix4me
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Re: What tilt(s) have you adopted?

Post by nix4me » Sat Jul 20, 2019 8:09 pm

i tilted towards large cap - 100% S&P / Total Stock

RamblinDoc
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Re: What tilt(s) have you adopted?

Post by RamblinDoc » Sat Jul 20, 2019 8:18 pm

I tilt 7.5% REIT and 7.5% Small Cap.

The rest are the usual total market indexes (total US, total international...)

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Sandtrap
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Re: What tilt(s) have you adopted?

Post by Sandtrap » Sat Jul 20, 2019 8:22 pm

REIT's (20-25% of equities)
Intermed Term Invest. Grade Bond Fund (1/3 of fixed/bonds)
Remaining is Bogle Portfolio but no International Equities or International Bonds. (so USA tilt).
Wiki Bogleheads Wiki: Everything You Need to Know

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ruralavalon
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Re: What tilt(s) have you adopted?

Post by ruralavalon » Sat Jul 20, 2019 8:26 pm

JoMoney wrote:
Sat Jul 20, 2019 3:49 pm
I use an S&P 500 index fund, which tilts towards the large-cap U.S. market
This i not really a "tilt" in my opinion, because a S&P 500 index fund is so very typical of the total U.S. stock market.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

averagedude
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Re: What tilt(s) have you adopted?

Post by averagedude » Sat Jul 20, 2019 8:26 pm

OP, my tilts are almost identical to yours. Not enough to make a big difference, but not too large that i will feel terrible if the domestic, size, and value factors turn out to be losing trades. With that being said, making or losing 25 to 50 extra basis points on your annualized rate of return can be a big deal over a 40+ year time horizon. You place your bets and live with the outcomes, but it is wise not to place all of your chips in the middle of the table on only one particular asset class.

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JoMoney
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Re: What tilt(s) have you adopted?

Post by JoMoney » Sat Jul 20, 2019 8:39 pm

ruralavalon wrote:
Sat Jul 20, 2019 8:26 pm
JoMoney wrote:
Sat Jul 20, 2019 3:49 pm
I use an S&P 500 index fund, which tilts towards the large-cap U.S. market
This i not really a "tilt" in my opinion, because a S&P 500 index fund is so very typical of the total U.S. stock market.
There's been plenty of threads / articles talking about it being over-weighted in technology, or underweight in REITs, not enough exposure to international or factors.. blah blah blah... I'm good with it being the most often referenced proxy for the U.S. market, or a tilt away from all the alternatives so often touted as being necessary "diversification"... either way 8-)
"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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Dialectical Investor
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Re: What tilt(s) have you adopted?

Post by Dialectical Investor » Sat Jul 20, 2019 8:41 pm

This is a Rorschach test for this forum if I've ever seen one. Already a few interesting answers, including not answering the question (simplicity), my tilt is not a tilt (implied by omission), and the most strange one, your tilt is not a tilt. The actionable message for the OP: consider responses skeptically.

Topic Author
Sirjames
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Re: What tilt(s) have you adopted?

Post by Sirjames » Sun Jul 21, 2019 7:00 am

I appreciate your responses thus far!

I do think about going more simple one day.. ie 3 fund portfolio. But how would one tax loss harvest, avoiding wash-sales, if we hold the same “total X market” funds across our accounts? For purposes of this question let’s assume one taxable account, two Backdoor Roth IRAs, and two 401ks.

I like to hold the total US market ETF and total international ETF in our taxable brokerage account, and tilt with the other accounts. By doing so I know I’ll never have a wash-sale. As my taxable account grows faster than my other accounts I may not be able to stick to the tilts, but I think I’d still keep the various types of fund ETFs in order to keep TLH simple.

Thoughts?
Patience is the ultimate hedge

trueblueky
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Re: What tilt(s) have you adopted?

Post by trueblueky » Sun Jul 21, 2019 7:20 am

We are 60/40. That is tilted toward equities compared to the overall market.
The stocks are 1/3 international. That is tilted US.
All fixed income is US. That is tilted US.
Within fixed income, federal government is overweighted, compared to commercial debt. No municipals.
Within TSP, the ratio of C Fund (US large companies) to S Fund (US completion) is 3:1. The recent growth of large companies has turned that from balanced to tilt small.
I have no gold or other commodities (tilt away from CBOT to NYSE).

Some of those are not thought of as tilt, I recognize.

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Re: What tilt(s) have you adopted?

Post by abuss368 » Sun Jul 21, 2019 7:49 am

Taylor Larimore wrote:
Sat Jul 20, 2019 7:49 pm
What do you think? How do you tilt?
Sirjames:

When we moved our securities to Vanguard in 1986 we soon accumulated a portfolio of 15 Vanguard funds (I wrongly thought more funds meant lower risk and higher returns). I am now down to 2 broad market index funds and could not be happier with my portfolio's simplicity and improved performance.

Best wishes.
Taylor
Simplicity is the master key to financial success!
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: What tilt(s) have you adopted?

Post by abuss368 » Sun Jul 21, 2019 7:49 am

Taylor Larimore wrote:
Sat Jul 20, 2019 7:49 pm
What do you think? How do you tilt?
Sirjames:

When we moved our securities to Vanguard in 1986 we soon accumulated a portfolio of 15 Vanguard funds (I wrongly thought more funds meant lower risk and higher returns). I am now down to 2 broad market index funds and could not be happier with my portfolio's simplicity and improved performance.

Best wishes.
Taylor
Incredible story Taylor. Every time I read that.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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abuss368
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Re: What tilt(s) have you adopted?

Post by abuss368 » Sun Jul 21, 2019 7:50 am

Presently we have both U.S. and International REITs.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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welderwannabe
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Re: What tilt(s) have you adopted?

Post by welderwannabe » Sun Jul 21, 2019 7:53 am

I tilt my fixed income. Instead of TBM I am presently 50% intermediate treasuries and 50% short corporates.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Wiggums
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Re: What tilt(s) have you adopted?

Post by Wiggums » Sun Jul 21, 2019 7:55 am

Two VG broad based index funds for me. I like boring now :-)

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AerialWombat
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Re: What tilt(s) have you adopted?

Post by AerialWombat » Sun Jul 21, 2019 11:25 am

Most of my net worth is in direct real estate and private equity.
In taxable brokerage, I'm 100% high yield muni bonds.
In 401k, I'm mostly in a single mortgage REIT, no broad equity exposure for me at all. I have zero interest in stressing out over the daily volatility of public equities.

MoneyMarathon
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Re: What tilt(s) have you adopted?

Post by MoneyMarathon » Sun Jul 21, 2019 2:26 pm

AerialWombat wrote:
Sun Jul 21, 2019 11:25 am
In 401k, I'm mostly in a single mortgage REIT
This seems unwise.

One of the most common stories of great loss for individual investors are those who put most of their money in a single "safe" name.

Diversification really is a free lunch when it comes to avoiding loss from individual securities. There are other low volatility equities too.

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Re: What tilt(s) have you adopted?

Post by AerialWombat » Sun Jul 21, 2019 6:02 pm

MoneyMarathon wrote:
Sun Jul 21, 2019 2:26 pm
AerialWombat wrote:
Sun Jul 21, 2019 11:25 am
In 401k, I'm mostly in a single mortgage REIT
This seems unwise.

One of the most common stories of great loss for individual investors are those who put most of their money in a single "safe" name.

Diversification really is a free lunch when it comes to avoiding loss from individual securities. There are other low volatility equities too.
I understand and accept the risks of a leveraged mortgage REIT. This particular mREIT is 3/4 invested in thousands upon thousands of agency mortgages (Fannie/Freddie backed) -- this is quite diversified compared to my other investments in short-term fix/flip loans ("hard money"). It's a low-volatility, high yield REIT. Basically, it behaves more like a junk bond fund. It historically does very well in a low (and lowering) interest rate environment. I'm a perma-bear. My target securities AA is 30/70, but I'm more like 1/99 or some such in application. Given my private equity and direct real estate risks, I'm incredibly comfy with this arrangement.

For what it's worth, I would NEVER recommend my own portfolio to a client. :beer

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