Author Topic: Replicating VTSAX in 457. Narrowed it to 3 choices.  (Read 439 times)

degrom7

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Replicating VTSAX in 457. Narrowed it to 3 choices.
« on: December 02, 2018, 08:24:57 PM »
For my 457, there are no Vanguard funds. However I have come down to the following 3 options. Can you tell me which one is preferred?

1) Using John Collins Stock Series, I came up with the following for my 457.
- Equity Index Fund (Bank of NY Melon) tracks the S&P 500  = 81%  with expense ratio of 0.05%
- Mid-Cap (State Street Global Advisors) tracks the S&P 400 MidCap = 6%   with expense ratio of 0.07%
-Small-Cap tracks the Russell 2000 = 13%   with expense ratio of 0.45

2) Also found in John Collins Stock Series, he just said that putting it all in the S&P 500 would be a good choice.
- Equity Index Fund (Bank of NY Melon) tracks the S&P 500  = 100%  with expense ratio of 0.05%

3) Target Retirement Fund 2040 with 90% stocks and 10% bonds. Expense ratio is 0.23%
- 90% stocks are comprised of 46% large cap, 7% mid-cap, 30% international, and 7% small-cap.
- 10% are comprised of bonds.

So with the options above, which would you consider to replicating VTSAX as close as possible while keeping a low expense ratio?

Thanks in advance!
« Last Edit: December 02, 2018, 08:35:42 PM by degrom7 »

MDM

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Re: Replicating VTSAX in 457. Narrowed it to 3 choices.
« Reply #1 on: December 02, 2018, 09:19:55 PM »
Probably #1.

Not #3, because VTSAX is US only.

See Approximating total stock market for some thoughts.

Of course, the critical question "which will do best for you?" can be answered only in hindsight. ;)

Good luck!

degrom7

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Re: Replicating VTSAX in 457. Narrowed it to 3 choices.
« Reply #2 on: December 02, 2018, 09:38:06 PM »
Probably #1.

Not #3, because VTSAX is US only.

See Approximating total stock market for some thoughts.

Of course, the critical question "which will do best for you?" can be answered only in hindsight. ;)

Good luck!

Thanks for the link. I was thinking option 1 too. From looking at the link, VTSAX is 73% large, 18% mid, and 9% small. With the different expense ratios in my 457b (large-cap being 0.05 and small-cap being 0.45), am I better off with option 1 or this allocation?

Thanks for your advice!


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MDM

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Re: Replicating VTSAX in 457. Narrowed it to 3 choices.
« Reply #3 on: December 02, 2018, 09:48:04 PM »
From looking at the link, VTSAX is 73% large, 18% mid, and 9% small. With the different expense ratios in my 457b (large-cap being 0.05 and small-cap being 0.45), am I better off with option 1 or this allocation?
No way to know in advance.

See also Callan periodic table of investment returns - Bogleheads for how things flip around from year to year.

The good news is that you identified some very reasonable options, so it is unlikely that you will be making a big mistake with any of them.

terran

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Re: Replicating VTSAX in 457. Narrowed it to 3 choices.
« Reply #4 on: December 03, 2018, 06:12:19 AM »
Also don't forget that your asset allocation doesn't all have to happen in one account. If you have a 403(b) with different investment options or an IRA you can use those to round out your allocation by picking the best funds available in each account to get to your desired allocation across accounts.