Anyone have a tilt portfolio similar to this

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
SpartanBull
Posts: 131
Joined: Fri Jun 06, 2014 12:31 am

Anyone have a tilt portfolio similar to this

Post by SpartanBull » Sat Feb 04, 2017 2:48 am

Hello,
I was just curious if anyone has a portfolio similar to this for their equity portion.
30% total stock market fund
30% Small Cap Value
20% total international fund
20% emerging market
This fund is 60/40 as far as US/International. Its also 50% total stock market funds versus 50% in SCV and EM type funds. I'm mainly wondering if this portfolio is extreme on the risk side? Anything glaringly odd/missing with it? Also curious if this type of portfolio is somewhat common among Bogleheads who DO tilt.

User avatar
StevieG72
Posts: 826
Joined: Wed Feb 05, 2014 9:00 pm

Re: Anyone have a tilt portfolio similar to this

Post by StevieG72 » Sat Feb 04, 2017 5:33 am

It is a common tilt, however you may be a bit too tilted on international including EM.

Have you read All About Asset Allocation? Great read with many good ideas for those that want to tilt a bit....
Fools think their own way is right, but the wise listen to others.

TomCat96
Posts: 524
Joined: Sun Oct 18, 2015 12:18 pm

Re: Anyone have a tilt portfolio similar to this

Post by TomCat96 » Sat Feb 04, 2017 6:04 am

SpartanBull wrote:Hello,
I was just curious if anyone has a portfolio similar to this for their equity portion.
30% total stock market fund
30% Small Cap Value
20% total international fund
20% emerging market
This fund is 60/40 as far as US/International. Its also 50% total stock market funds versus 50% in SCV and EM type funds. I'm mainly wondering if this portfolio is extreme on the risk side? Anything glaringly odd/missing with it? Also curious if this type of portfolio is somewhat common among Bogleheads who DO tilt.

It's a little hard to say for certain without knowing the rest of your portfolio risk is, what your goals are, and your timeframe. Theres a big difference if your overall equity position is 10% of your portfolio vs 100%.

Your equity position does tilt aggressively. I can't say there's anything wrong with it other than it's not my allocation.
For comparison, I am 30% VTI, 10% VO 60% VXF, with my entire portfolio in stocks.

I'm pretty aggressively tilted myself.


Surely you must have done some backtesting on your small cap value or emerging markets to see how they performed. I'm guessing you liked what you saw.

All I can offer you is the rationale for why I picked what I picked.
1) I decided to stick with the U.S. because I don't honestly believe international markets are yet well behaved efficient markets.
2) I believe the rationale for point 1 is even more true of emerging markets.

For example, consider vanguard emerging markets funds VEIEX. The 10 year past performance has been 1.72% CAGR and a 5.93% CAGR since 1994.

When I see a 5.93% CAGR over a 23 year period, and a 1.72% CAGR for the past decade, I don't see that as evidence emerging markets are overdue for abnormal returns. What I see is that the market itself is either dysfunctional or inefficient for some reason.

The character of that entire market is inferior for a set of reasons we can only speculate on.

I am assuming you disagree with my rationale on some fundamental level, or else you would not have invested in EM. But you wanted some feedback. And that's mine.

SpartanBull
Posts: 131
Joined: Fri Jun 06, 2014 12:31 am

Re: Anyone have a tilt portfolio similar to this

Post by SpartanBull » Sat Feb 04, 2017 6:30 am

For the record the portfolio stated in the original post is not "my" portfolio. I was asking for thoughts on "this" portfolio, just referencing the hypothetical portfolio above. Personally I'm currently 100% stock, and just a 2 fund portfolio (total stock 2/3, Total international 1/3).

IlliniDave
Posts: 2294
Joined: Fri May 17, 2013 7:09 am

Re: Anyone have a tilt portfolio similar to this

Post by IlliniDave » Sat Feb 04, 2017 7:18 am

If I only look at equities in my retirement accounts, I'm roughly similar to that. But I also have 25%-ish of my assets in bonds, which I've been trying to increase to 30% via new contributions for over a year now, but the stocks keep outpacing me.

It doesn't seem terribly unusual, although a lot of folks don't tilt at all and I'd guess on average BH's hold less overseas equity. Most BH's would also have an appreciable dollop of bonds, of course.
Don't do something. Just stand there!

User avatar
Sammy_M
Posts: 1887
Joined: Sun Nov 25, 2007 8:30 am

Re: Anyone have a tilt portfolio similar to this

Post by Sammy_M » Sat Feb 04, 2017 7:29 am

SpartanBull wrote:Hello,
I was just curious if anyone has a portfolio similar to this for their equity portion.
30% total stock market fund
30% Small Cap Value
20% total international fund
20% emerging market
This fund is 60/40 as far as US/International. Its also 50% total stock market funds versus 50% in SCV and EM type funds. I'm mainly wondering if this portfolio is extreme on the risk side? Anything glaringly odd/missing with it? Also curious if this type of portfolio is somewhat common among Bogleheads who DO tilt.
The US/Intl split seems fine. Too much emerging market IMO, and relying too much on US to get SV exposure. I like this better.

40% total stock market fund
20% Small Cap Value
30% total international fund (or maybe shift 10-20% of this to Vanguard Intl Value, SFILX, PDN or FNDC)
10% emerging market

livesoft
Posts: 62700
Joined: Thu Mar 01, 2007 8:00 pm

Re: Anyone have a tilt portfolio similar to this

Post by livesoft » Sat Feb 04, 2017 7:42 am

Switch the EM to small-cap foreign and up both international funds to half the allocation, then you would have a portfolio.
25% total stock market fund
25% Small Cap Value
25% total international fund
25% small-cap foreign
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Anyone have a tilt portfolio similar to this

Post by in_reality » Sat Feb 04, 2017 7:47 am

livesoft wrote:Switch the EM to small-cap foreign and up both international funds to half the allocation, then you would have a portfolio.
25% total stock market fund
25% Small Cap Value
25% total international fund
25% small-cap foreign
Why only a value tilt in the US?

livesoft
Posts: 62700
Joined: Thu Mar 01, 2007 8:00 pm

Re: Anyone have a tilt portfolio similar to this

Post by livesoft » Sat Feb 04, 2017 7:52 am

^That portfolio has a value tilt to foreign, too.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Anyone have a tilt portfolio similar to this

Post by in_reality » Sat Feb 04, 2017 8:11 am

livesoft wrote:^That portfolio has a value tilt to foreign, too.

Where?

BogleTails
Posts: 33
Joined: Sun Aug 21, 2016 4:07 am

Re: Anyone have a tilt portfolio similar to this

Post by BogleTails » Sat Feb 04, 2017 8:29 am

in_reality wrote:
livesoft wrote:^That portfolio has a value tilt to foreign, too.

Where?
I think livesoft meant the last line to be small cap value foreign, like VSS.

User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Anyone have a tilt portfolio similar to this

Post by in_reality » Sat Feb 04, 2017 8:33 am

BogleTails wrote:
in_reality wrote:
livesoft wrote:^That portfolio has a value tilt to foreign, too.

Where?
I think livesoft meant the last line to be small cap value foreign, like VSS.
Last I checked market cap weighting wasn't a value tilt.

The Vanguard FTSE All-World ex-US Small Cap ETF tracks a market-cap-weighted index of global non-US small-cap stocks.

livesoft
Posts: 62700
Joined: Thu Mar 01, 2007 8:00 pm

Re: Anyone have a tilt portfolio similar to this

Post by livesoft » Sat Feb 04, 2017 8:48 am

Don't go by the name. I define a value tilt as a higher sum in the value column in the M* 9-box style grid than in the growth column. Perhaps one will find that market weights of small-cap foreign companies ends up being value tilted?

But one could get a small-cap foreign value fund or mix in a small-cap em value fund such as DGS or one of those Scwhwabbie things.

Don't get lost in the details.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
billyv
Posts: 57
Joined: Fri Aug 05, 2016 10:25 am

Re: Anyone have a tilt portfolio similar to this

Post by billyv » Sat Feb 04, 2017 11:34 am

Just FYI: Total Int'l already includes about 20% Emerging Mkts, so in a sense it's already somewhat "tilted" to EM. For that reason, using VSS, as livesoft suggests, might offer more diversification across regions and sectors. You might also consider splitting your US small value allocation between VBR and VIOV, which tracks the S&P 600 small cap index and is considered smaller and more "value-y" than VBR.

Theoretical
Posts: 1422
Joined: Tue Aug 19, 2014 10:09 pm

Re: Anyone have a tilt portfolio similar to this

Post by Theoretical » Sat Feb 04, 2017 12:59 pm

I'd do something like this

30% Total Stock Market
30% Small Value (IJS, VBR, or FNDA are all good options)

20% Developed Markets (VEA or IEFA)
10% International Small Cap (FNDC, PDN or SCHC)
10% Emerging Markets Value (FNDE or TLTE or DGs or a 50/50 combo of FNDE and DGS)

MikeMak27
Posts: 101
Joined: Fri Jul 03, 2015 4:37 am

Re: Anyone have a tilt portfolio similar to this

Post by MikeMak27 » Sat Feb 04, 2017 2:19 pm

I am in the process of doing something very similar to you. For my equity allocation (80% of all funds, 15% bonds, 5% cash being used to get sign up checking and savings bonuses, which is similar to being a bond), I am going to be 25% large cap blend, 25% small cap value (IJS S&P 600), 10% US REIT, 20% Small Cap Developed Intl (SCZ), and 20% emerging market (VWO).
I disagree with others that are saying 40% intl is too much simply because the us market cap is only 52% of the entire world stock market, and because the US dollar has been strong over the last few years, which has eaten into intl returns. Furthermore, Vanguard itself recommends 40% intl allocation. If the dollar weakens, intl will likely outperform the US market. Additionally, valuations are pointing to much better returns for intl especially emerging markets. The key to your plan is once you have decided on it, to stick with it.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

User avatar
jhfenton
Posts: 3298
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Anyone have a tilt portfolio similar to this

Post by jhfenton » Sat Feb 04, 2017 3:16 pm

It's not unreasonable. My equity allocation (88% of portfolio) isn't too far off of that. The main difference is the addition of small cap international and a 50/50 US/International split.

12.5% S&P 500
12.5% Midcap Value (VMVAX)
25.0% Smallcap Value (VSIAX)
16.7% Total Developed (VTMGX)
16.7% ex-US Small (VSS) (19% Emerging Markets)
16.7% Emerging Markets (VEMAX/VWO)

I don't have access to Total Stock or Small Value in my 401(k) or HSA, just S&P 500 and Midcap Value. So those two accounts are split between S&P 500 and Midcap Value. Our four different Roth and traditional IRA accounts hold all of our fixed income, small cap value, and international.

binvesting
Posts: 97
Joined: Mon Sep 28, 2015 2:09 am

Re: Anyone have a tilt portfolio similar to this

Post by binvesting » Sat Feb 04, 2017 6:20 pm

Somwhere I have seen this to be mentioned as TrevH's portfolio:
25% US Large blend
25% US small value
Intl is rest 50% split as:
20% Intl large value (i think EFV was used here, it has no small caps. (Edit to add that looks like efv is developed markets only)).
20% Intl Small
10% Intl EM

This is very similar to what livesoft mentioned above as 25% each i guess.
Last edited by binvesting on Sun Feb 05, 2017 5:58 pm, edited 1 time in total.

heyyou
Posts: 3131
Joined: Tue Feb 20, 2007 4:58 pm

Re: Anyone have a tilt portfolio similar to this

Post by heyyou » Sat Feb 04, 2017 9:08 pm

Here is the Trev H thread discussing his VG version of Merriman's Slice and Dice portfolio:
viewtopic.php?f=10&t=38374
25% domestic Large Blend
25% domestic Small Value
25% international Large Value
25% international Small Blend

binvesting
Posts: 97
Joined: Mon Sep 28, 2015 2:09 am

Re: Anyone have a tilt portfolio similar to this

Post by binvesting » Sun Feb 05, 2017 5:57 pm

Yes, thanks for that link.
And I was referring to this post which suggested doing the same with efv & vwo which I was referring to from memory.. :happy
Also looks line efv doesn't have EM and small caps.
viewtopic.php?f=10&t=111952&p=1628862&h ... v#p1628862

freyj6
Posts: 206
Joined: Thu Jun 19, 2014 2:09 am

Re: Anyone have a tilt portfolio similar to this

Post by freyj6 » Sun Feb 05, 2017 10:09 pm

Yes mine is/has been quite similar to that.

Much to the dismay of the bogleheads, however, I've been selling a bit of small cap value recently.

Tom1320
Posts: 27
Joined: Wed Feb 01, 2017 9:23 am
Location: lost in the Carolina foothills

Re: Anyone have a tilt portfolio similar to this

Post by Tom1320 » Mon Feb 06, 2017 9:07 am

Our equity allocation is currently close to the example given:
U.S.
25% total market
25% small value

International
25% total market
25% emerging market

Changes planned are to replace the total market funds with large caps to reduce overlap and add Intl small. Something like this:
U.S.
25% S&P 500
25% small value

International
16.7% large blend or large value
16.7% small cap
16.7% emerging market

Equity allocations make up 40% of total portfolio.
"And this, too, shall pass away." How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction! - Our 16th President

Elbowman
Posts: 491
Joined: Tue Apr 03, 2012 2:25 pm

Re: Anyone have a tilt portfolio similar to this

Post by Elbowman » Mon Feb 06, 2017 12:36 pm

Yes, quite similar:

20% TSM
20% US-SCV
20% Developed International
20% Emerging
20% TBM

The reason I don't like the Trev H portfolio is I want to own a piece of everything, i.e. I don't want to be left on the sidelines if the nano-tech / bio-tech / not-yet-invented-tech revolution is dominated by LCG companies in Germany and Japan.

Also, I am fine with only US SCV, since that is the only really cheap exposure right now. If I can't count on US SCV paying off over the next 30 years, then I sure as heck don't want to be paying 50 BP for international SCV (because why should that be any more reliable?)

Post Reply