Core funds

[keyvaluepair]

Hi all,
Based on a previous thread, I am now trying to rebalance my portfolio and seek the wisdom of the mighty hordes of fellow Mustachians <genuflects> on core fund holdings in various categories. Here are current candidates and am interested in understanding alternatives:

(1) International Growth: VTMGX for lower risk or VFWAX (higher risk) but more gains.
(2) Core bond: VBILX/VBMFX or FTBFX.
(3) Overall index: VTSAX (currently significant holding in VFIAX).
(4) REIT: VGSLX

The allocation is likely to be REIT(6%), Bond (30%), International (10%), Overall Index (54%).

Any thoughts on this?
thanks
kv

[TomTX]

Hi all,
Based on a previous thread, I am now trying to rebalance my portfolio and seek the wisdom of the mighty hordes of fellow Mustachians <genuflects> on core fund holdings in various categories. Here are current candidates and am interested in understanding alternatives:

(1) International Growth: VTMGX for lower risk or VFWAX (higher risk) but more gains.
(2) Core bond: VBILX/VBMFX or FTBFX.
(3) Overall index: VTSAX (currently significant holding in VFIAX).
(4) REIT: VGSLX

The allocation is likely to be REIT(6%), Bond (30%), International (10%), Overall Index (54%).

Any thoughts on this?
thanks
kv

Are you investing several hundred thousand dollars or more?

If not, you're making it overly complex.

[MDM]

See Three-fund portfolio - Bogleheads and links therein for some good options.

[keyvaluepair]

Roughly 2M in terms of investments on top of some existing stuff. That is why I was thinking of having a bit of a barbell to have a certain amount of higher risk/higher return funds.

I'll take a look at the performance of VGTX.

[keyvaluepair]

Hit send too fast .. sorry.

Overall my strategy always has been to minimize the expense ratio. And thanks very much for the bogleheads pointer.

[DavidAnnArbor]

See Three-fund portfolio - Bogleheads and links therein for some good options.

In the information provided in Bogleheads, the Fidelity's Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX) lacks an emerging market component. So I would definitely want to add an emerging market index to this.

[MDM]

In the information provided in Bogleheads, the Fidelity's Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX) lacks an emerging market component.

What information are you seeing?  Based on https://thefinancebuff.com/fidelity-international-stock-index-fund-small-caps.html, FTIPX - New Fidelity offering [Total International Index Fund] - Bogleheads.org, etc., it seems emerging markets are in there...?

[Radagast]

We'd need more about your situation and objectives to give better advice. REIT's are not tax friendly and should only go in an IRA or similar. Bonds are also somewhat tax unfriendly, and you should not use VBILX/VBMFX/FTBFX in a taxable account if you are 25% tax bracket or higher.

For asset allocation, I don't think four is too many, but I think the 6% REIT allocation is too small to be worth the effort. Also I never recommend having more than 50% in US stocks for someone who has "made it." I think 45% US, 30% international, 25% bonds is a good starting point

[DavidAnnArbor]

In the information provided in Bogleheads, the Fidelity's Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX) lacks an emerging market component.

What information are you seeing?  Based on https://thefinancebuff.com/fidelity-international-stock-index-fund-small-caps.html, FTIPX - New Fidelity offering [Total International Index Fund] - Bogleheads.org, etc., it seems emerging markets are in there...?

Oh I see. I didn't realize there were so many other Fidelity international index funds.
I have FSIVX (developed market total international ) which has an expense ratio of .06% and then I added an emerging market index FPMAX which has an expense ratio of .13%

[keyvaluepair]

(1) That was a good catch on FSIVX. Don't think I'd find it by myself.
(2) I am a bit intrigued by the comment: "For someone who has made it, I never recommend having more than 50% in US stocks". Why is this? Are you saying that I should up the bond proportion? Looking forward eagerly to greater comprehension.
thanks for all of the help, here guys. BTW are there local MMM chapters, I'd love to meet other mustachians in the area.

[Radagast]

Not more than 50% in US stocks is just a risk and return thing. Personally I think more in international stocks is the best route instead of more bonds. Historically there have been long periods when the US underperformed the rest of the world, for example from 1964-1989. Just realize that the future is unknowable and diversification is the only free lunch. Keeping less than 50% in US stocks is a risk that is easy to diversify. 50% US stocks, 40% bonds, 10% international meets that criteria and is Bogle Approved, it just seems like too much in bonds to me.

[Heroes821]

I think you have plenty of solid advice above, but I made my own 3-fund this way:

Domestic: 60% VTSMX (VTSAX) [VFINX if like my HSA I have no other choice]
International: 30% VTIAX
Bonds:  10% VTEAX

The bond fund has a .25% purchase fee, but it's listed as a tax exempt bond and I keep all the bond % of my AA in my taxable account.

Due to some REITs being rolled in VTSAX and the more complex taxes I just got rid of adding those.

[keyvaluepair]

Thanks a lot guys. As again, the Mustachians deliver. If any of you ever visit the Seattle area, I'd be glad to buy you beer.