401K fund allocation

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Topic Author
Jeeperscrow
Posts: 5
Joined: Mon Jan 13, 2020 7:46 pm

401K fund allocation

Post by Jeeperscrow » Tue Jan 14, 2020 4:11 pm

Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)

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ruralavalon
Posts: 17140
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: 401K fund allocation

Post by ruralavalon » Tue Jan 14, 2020 4:25 pm

Jeeperscrow wrote:
Tue Jan 14, 2020 4:11 pm
Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)
These are probably Collective Investment Trusts (CITs) rather than mutual funds. Wiki article, "Collective Investment Trusts" .

In your 401k materials or on the 401k website there will be a short fact sheet for each fund which states -- (1) the name of the company managing the fund (like Vanguard, BlackRock, State Street, Fidelity, etc.), (2) the expense ratio, (3) the index tracked by the fund, and (4) a comparison of fund performance to the index.

What company manages each CIT, and what index is used by each CIT?

At age 22
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Jeeperscrow
Posts: 5
Joined: Mon Jan 13, 2020 7:46 pm

Re: 401K fund allocation

Post by Jeeperscrow » Tue Jan 14, 2020 4:33 pm

This is with fidelity.

The small cap blend is benchmarked against russell 2000. Large cap blend benchmarked against a blend of S&P500 and russell 1000. Large cap value benchmarked against russell 1000 value, and large cap growth benchmarked against russell 1000 growth and the international is benchmarked against MSCI ACWI ex US

Topic Author
Jeeperscrow
Posts: 5
Joined: Mon Jan 13, 2020 7:46 pm

Re: 401K fund allocation

Post by Jeeperscrow » Tue Jan 14, 2020 4:34 pm

ruralavalon wrote:
Tue Jan 14, 2020 4:25 pm
Jeeperscrow wrote:
Tue Jan 14, 2020 4:11 pm
Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)
These are probably Collective Investment Trusts (CITs) rather than mutual funds. Wiki article, "Collective Investment Trusts" .

In your 401k materials or on the 401k website there will be a short fact sheet for each fund which states -- (1) the name of the company managing the fund (like Vanguard, BlackRock, State Street, Fidelity, etc.), (2) the expense ratio, (3) the index tracked by the fund, and (4) a comparison of fund performance to the index.

What company manages each CIT, and what index is used by each CIT?

At age 22
This is with fidelity.

The small cap blend is benchmarked against russell 2000. Large cap blend benchmarked against a blend of S&P500 and russell 1000. Large cap value benchmarked against russell 1000 value, and large cap growth benchmarked against russell 1000 growth and the international is benchmarked against MSCI ACWI ex US

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ruralavalon
Posts: 17140
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: 401K fund allocation

Post by ruralavalon » Tue Jan 14, 2020 4:44 pm

Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%
At age 22 I suggest about 20% in bonds or other fixed income investments (like CDs, savings accounts, money market fund). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation"; and
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

That works out to about 20% bonds, 20% international stocks, and 60% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)
This is with fidelity.

The small cap blend is benchmarked against russell 2000. Large cap blend benchmarked against a blend of S&P500 and russell 1000. Large cap value benchmarked against russell 1000 value, and large cap growth benchmarked against russell 1000 growth and the international is benchmarked against MSCI ACWI ex US
If you want a small and value tilt in domestic stocks you could use a combination of:
Fidelity Large cap index value (Russell 1000 value index) ER 0.057%; and
Fidelity Small cap blend (Russell 2000 index) ER 0.056%.

Try using Morningstar's "Instant x-ray" tool to determine a mix that gives the amount of small and value tilt you desire to have.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

averagedude
Posts: 853
Joined: Sun May 13, 2018 3:41 pm

Re: 401K fund allocation

Post by averagedude » Tue Jan 14, 2020 5:22 pm

Jeeperscrow wrote:
Tue Jan 14, 2020 4:11 pm
Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)
This is similar to what I would do if I was 22 years old and this was my only fund choices. Sounds completely reasonable to me. Surely this isn't your only fund choices is it?

Topic Author
Jeeperscrow
Posts: 5
Joined: Mon Jan 13, 2020 7:46 pm

Re: 401K fund allocation

Post by Jeeperscrow » Tue Jan 14, 2020 5:45 pm

averagedude wrote:
Tue Jan 14, 2020 5:22 pm
Jeeperscrow wrote:
Tue Jan 14, 2020 4:11 pm
Hello, I am trying to figure out the most optimal way to allocate the funds available in my 401K. I’m 22 so I will be going 100% equity. I don’t have any ticket symbols since it’s a private institution.

Large cap index blend: 038%
Large cap index value: .057%
Large cap index growth: .057%
Small cap blend: .056%
International: .110%

I was thinking 60% large cap index blend, 30% international, and 10% small cap blend (id prob go higher on this if it was just a small cap value but I dislike the small cap growth part)
This is similar to what I would do if I was 22 years old and this was my only fund choices. Sounds completely reasonable to me. Surely this isn't your only fund choices is it?
I had some bonds, target dates, money market, stable market funds also. But I wasn’t too interested in those

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