Author Topic: Total Market Asset Allocation Composition (How to find and build)  (Read 561 times)

fund4tomorrow

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Happy New Year,

Would anyone be able to point me to a resource that would show what percentages a US Total Market Index fund is made up of in terms of the large, mid and small caps?

My employers plan has some new options for me, but they do not include a Total Market Index fund like VTSAX. 

Fortunately, I do have access to an S&P 500 clone, Midcap Index and Small Cap Index choices. 

Finally, do Index funds in general imply that they are "blended" between both growth and value so that they encompass their total market capitalization or is there an even finer definition?

Thanks all!


appleshampooid

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fund4tomorrow

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Re: Total Market Asset Allocation Composition (How to find and build)
« Reply #2 on: January 02, 2019, 05:42:51 PM »
Thank you for replying!

I took a look at the portfolios listed and it looks like the one most matching my options is the fifth option, however I am having a hard time reconciling the math with what's listed in the boxes.  Can someone please explain that? 

81% Vanguard 500 Index Fund (VFINX)
4% Vanguard Mid-Cap Index Fund (VIMSX)
15% Vanguard Small-Cap Index Fund (NAESX)

Hopefully the formatting keeps but the boxes are as below.

24   24   28
6   6   6
2   2   2

Thanks!

maizeman

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Re: Total Market Asset Allocation Composition (How to find and build)
« Reply #3 on: January 02, 2019, 05:53:48 PM »
I agree it's non-intuitive.

Part of the issue is that the S&P 500 includes many stocks which would be classified as "mid-cap" ($<10B in market cap). So you've got significantly more mid-cap in the 3x3 table than you would guess at first from the allocation across funds.

The vanguard small cap index fund as a MEDIAN market cap of $3.9 billion, but the morningstar classification (3x3 table) considers anything >$2B to be a mid-cap stock, so again a fair bit of the money in the vangard small cap fund is actually invested in mid-cap stocks.

Does that make sense?

Tyler

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Re: Total Market Asset Allocation Composition (How to find and build)
« Reply #4 on: January 02, 2019, 06:06:20 PM »
What maizeman said.

Personally, based on how the underlying indices work I would purchase 85% large cap (or S&P500 if that's your option) and 15% small cap.  You'll find mid caps in both, so a separate mid cap fund really isn't necessary.  And there's more float in each index than you think so it will be virtually impossible to perfectly track a total market fund with multiple funds without constant tweaks.  But that simple allocation should be reasonably close to the real thing performance-wise, so I would keep it simple and avoid over-thinking it. 
« Last Edit: January 02, 2019, 06:26:51 PM by Tyler »

degrom7

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Re: Total Market Asset Allocation Composition (How to find and build)
« Reply #5 on: January 02, 2019, 07:37:39 PM »
I had the same question a month ago. I ended up with 80% large, 5% mid, and 15% small


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