Approximating total stock market

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Approximating total stock market shows how funds can be combined in order to mimic the composition of the U.S. stock market.

Investors wishing to invest in Vanguard Total Stock Market Index Fund often face a situation where they have to approximate it with the funds available in their employer sponsored plans and quite possibly some other funds available in other accounts such as a Roth IRA.

This page shows a few examples of approximating Vanguard Total Stock Market Index Fund with funds covering specific parts of the market.

Examples

Funds Morningstar
Style Box
100% Vanguard Total Stock Market Index Fund (VTSMX)
23 24 25
6 6 7
3 3 3
100% iShares Core S&P Total U.S. Stock Market ETF (ITOT)
24 23 25
6 6 7
3 3 3
100% Schwab U.S. Broad Market ETF (SCHB)
24 23 25
6 6 7
3 3 3
81% Vanguard 500 Index Fund (VFINX)
19% Vanguard Extended Market Index Fund (VEXMX)
23 25 24
6 6 7
3 3 3
81% Vanguard 500 Index Fund (VFINX)
4% Vanguard Mid-Cap Index Fund (VIMSX)
15% Vanguard Small-Cap Index Fund (NAESX)
23 25 24
7 7 6
3 3 3
82% Vanguard 500 Index Fund (VFINX)
18% Vanguard Small-Cap Index Fund (NAESX)
23 25 23
6 6 6
3 4 3
85% Vanguard 500 Index Fund (VFINX)
15% iShares Russell 2000 Index (IWM)
24 26 24
4 4 3
4 5 5
83% Vanguard 500 Index Fund (VFINX)
11% iShares S&P MidCap 400 Index (IJH)
6% iShares S&P SmallCap 600 Index (IJR)
24 25 24
6 6 6
3 4 3
84% Vanguard 500 Index Fund (VFINX)
16% Vanguard Tax-Managed Small-Cap Fund Inv (VTMSX)
24 26 25
4 4 3
4 5 5
87% Vanguard Large Cap Index Fund (VLACX)
13% Vanguard Small-Cap Index Fund (NAESX)
23 25 24
6 7 7
2 3 3
81% Fidelity Spartan 500 Index Fund (FUSEX)
10% Fidelity Spartan Mid Cap Index Fund (FSCLX)
9% Fidelity Spartan Small Cap Index Fund (FSSPX)
23 24 25
7 6 5
3 3 3
92% iShares Russell 1000 ETF (IWB)
8% iShares Russell 2000 ETF (IWM)[1]
23 25 25
6 6 6
3 3 3
82% John Hancock 500 Index (JEINX)
11% John Hancock Mid Cap Index (JECIX)
7% John Hancock Small Cap Index (JESIX)[2]
24 24 24
6 6 7
3 3 3
  • These percentages were computed on Nov 1, 2015, except where otherwise noted.
  • The style box numbers were computed by Morningstar Instant XRay.
  • Computation was done by the method of least squares.
  • Investors contemplating on using an S&P MidCap 400 fund, for example, may consider the example above that uses IJH. However, there may be slight implementation differences between the S&P MidCap 400 fund you have access to and IJH.
  • Two funds may appear to track the same portion of the market (say, mid-cap), but their holdings may differ depending on the indexes they track.

See also

References

  1. See Boglehead Forum Thread for more on combining these two funds to approximate total stock market.
  2. Calculated in Morningstar X-Ray on Feb. 27, 2013. This combination is likely only of interest to investors with a 401(k) plan held at John Hancock Funds. As of November 1, 2015, these ticker symbols are no longer available in Morningstar Instant X-Ray.