How should I weigh S&P 500 and Extended Market?

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kjm
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Joined: Wed Aug 26, 2009 1:05 pm

How should I weigh S&P 500 and Extended Market?

Post by kjm »

Within my 401(k), I have access to an S&P 500 index fund and an extended market index fund. In what proportions should I hold these to approximate the composition of the total US stock market? I'm thinking 60% - 70% S&P 500 and 30% - 40% extended market. I'm not looking for any particular tilt here. Thanks.
DSInvestor
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Post by DSInvestor »

80% S&P 500 Index 20% Extended Market may be close enough.

See this Vanguard Page on Benchmark Statistics:
https://personal.vanguard.com/us/funds/ ... statistics

Also see this BH wiki page on Approximating Total Stock Market.
http://www.bogleheads.org/wiki/Approxim ... ock_Market
Topic Author
kjm
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Joined: Wed Aug 26, 2009 1:05 pm

Post by kjm »

Exactly what I was looking for. Thanks for the links.
towdie
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SP 500?

Post by towdie »

I thint that based on the past ten years, i would go for 0% Sp 500 and 100% extended!
“The only thing to do with good advice is to pass it on. It is never of any use to oneself.”
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Taylor Larimore
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Re: SP 500?

Post by Taylor Larimore »

towdie wrote:I thint that based on the past ten years, i would go for 0% Sp 500 and 100% extended!
Past performance is no guarantee of future performance.
"Simplicity is the master key to financial success." -- Jack Bogle
maxfax
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Post by maxfax »

I see no reason that one's diversification should mimic the economic (or market) weights of companies. The point of diversification is accomplished by just the S&P. If you want added risk add some small caps.
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Taylor Larimore
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500 large-cap stocks or more?

Post by Taylor Larimore »

The point of diversification is accomplished by just the S&P.
Not really.

Vanguard's Total Market Index Fund holds about 3,400 U.S.stocks of all sizes. The S&P 500 Index Fund holds about 500 large-cap US stocks. A diversified investor will also hold international stocks and bonds.

Having said the above, owning stocks in 500 of the largest U.S. corporations will probably turn out to be a very good investment.
"Simplicity is the master key to financial success." -- Jack Bogle
nimo956
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Post by nimo956 »

If you do not have access to the Extended Market Index in your 401k, but have the Mid and Small Cap Index available, what would the % breakdown be for approx. the Total US Market? Also, if you already tilt to small value, would you just forgo holding small cap and small cap value, and only hold small cap value?
hmsbeagle
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Post by hmsbeagle »

Interesting. Is there any difference between investing in Vanguard Total Stock Market ETF or splitting it between the Large Cap ETF together with Vanguard Extended Market ETF?
DSInvestor
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Post by DSInvestor »

nimo956 wrote:If you do not have access to the Extended Market Index in your 401k, but have the Mid and Small Cap Index available, what would the % breakdown be for approx. the Total US Market? Also, if you already tilt to small value, would you just forgo holding small cap and small cap value, and only hold small cap value?
nimo956, Please see this BH wiki page on Approximating Total Stock Market which has an option using S&P 500, midcap and small cap index funds.
http://www.bogleheads.org/wiki/Approxim ... ock_Market

You can run some scenarios using Morningstar Portfolio X-Ray. Small cap value actually holds some mid cap and growth.
Here's the X-Ray for Small Cap Value (VISVX):
val core growth
00 00 00 large cap
10 13 03 mid cap
36 28 10 small cap

Here's the X-Ray for Small Cap Index (NAESX):
00 00 00
07 10 12
23 23 25

Here's the X-Ray for Mid Cap index (VIMSX):
02 02 03
30 31 31
01 00 00
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