Help - drowning in fund alphabet soup!

[travel2020]

Hello MMMs,

Since discovering MMM last year, I’ve been trying to get a handle on the random investments I’ve accumulated over the years. I’ve consolidated from several taxable, 401ks and other retirements accounts down to a single taxable and four retirement accounts (1 Roth + 1 IRA each for myself + DW).

As a next step, I’d like to change the mix so there’s a more balanced and manageable mix of investments. The taxable account will have to be adjusted slowly over time because of the significant capital gains hit involved but I’d definitely like to get rid of the alphabet soup in the retirement accounts and get to a more thought out plan.

Here are some relevant details:

- Currently 2-3 years from FIRE
- Taxable vs retirement: 58% taxable, 42% retirement

Taxable holdings: A couple of individual tech stocks, Various S&P500 focused funds & ETFs,  some VTEB, VTI, & VXUS

Retirement holdings: VBIAX, VDADX, VEMAX, VHYAX, VGSTX, VTSAX, VVIAX, VWNDX, FXAIX, FFNOX, RPBAX, PRWCX, PRMSX, TRGRX, TRRHX, TRVLX, BLV, BNDX, BNDX, IVV

For Taxable, I am thinking it would be best to keep things as is but direct future regular contributions only to VTI/VXUS in a 60%/40% split and over time, sell the individual stocks and non-Vanguard funds in chunks to avoid large cap gain taxes. And quite likely, just wait till FIRE to touch those.

For retirement, since I already have a large exposure to US via the funds in the taxable account, I’m considering the following consolidation/revised allocation to simplify things and increase non-US exposure:
- 40% VTI
- 60% VXUS

Questions:
- Should I consider funds other than VTI/VXUS e.g. bond or commodity focused in the retirement account? I have limited exposure to bonds through a balanced fund and some small portions in the taxable account.
- Should I be even more heavily weighted in non-US funds in the retirement account?
- The retirement accounts are at Vanguard. Logistically, would one sell the funds, wait for settlement and then purchase the new funds? Or does Vanguard let you place all the sell/buy transactions in one go? Mostly I just want to minimize time “out of market”
- Vanguard site has something about transaction fees for some non-Vanguard fund transactions. What steps should I take to check on those before selling to avoid surprises and any steps to minimize fees, if any?

Thanks!

[MustacheAndaHalf]

I'm not going to examine every fund in that list, but I will help you with a method to sort through it yourself: look at lower P/E ratios as better (in general).

I would recommend categorizing these funds as "US equities", "International Equities" and "bonds".  Then pick the lowest expense ratio in each category, and have that as a goal.

In your position, I would visit Vanguard's "cost basis" screen, and look at "unrealized gains" for each fund.  Divide the current value of each fund by what you paid (the first number in the row, "cost basis").  That will show you how much the fund has gained - and how much tax impact is involved in selling it.

I would take the highest expense ratio fund, with the lowest gains, and sell that first.  That gives you the biggest bang (reduced expense ratio) for the biggest buck (tax impact of selling).

[travel2020]

Thanks @MustacheAndaHalf, good advise on how to approach I and fix this!

[KungfuRabbit]

look at lower P/E ratios as better (in general).

Uhh....

I don't agree with this statement at all, and for sure I don't agree with it "in general".  P/E does not take into account growth, or total lack there of, so standard commodity companies (Exxon Mobile, Banks, etc) have lower P/E than high growth companies (Apple, Amazon, or at the extreme Tesla).

I'm not saying you should go all in on super high growth companies, but going all in on low P/E (and thus, low growth) companies is not wise either. 

[MustacheAndaHalf]

look at lower P/E ratios as better (in general).

I don't agree with this statement at all, and for sure I don't agree with it "in general".  P/E does not take into account growth, or total lack there of ...

Oh, crap - I don't agree with it either.  I meant "expense ratio", not P/E.  Notice that I keep mentioning expense ratios in that post, but never mention P/E again.

The lowest expense ratios come from passive index funds.  Active funds need to both do research, and keep some profits for the fund management.  There just isn't room for that with a 0.03% expense ratio, like that for VTSAX or VTI.

So I favor expense ratios both because low costs are helpful in themselves, and because they are a signal of passive index funds that can't be faked.  The names can be confusing, but the expense ratio has to be accurate.

[nereo]

I love it when people post to disagree with themselves :-)

For a 30,000 foot view, understand that more funds doesn’t mean More diversity. Counterintuitive, when holding broad market funds more funds can actually decrease diversity, or at the minimum give you more complexity with no tangible benefit

I would start by deciding what you want. What percentage of stocks and bonds, and within each what amount invested in large cap, small cap, international, etc.  That is your asset allocation (AA).  then decide the fewest number of funds which will allow you achieve your AA. Hint, if it is more than six, you are probably being way too complex. For inspiration, google “bogleheads three fund portfolio”.

More does not mean better.
FWIW I’ve got an SP500 fund, international fund and a bond fund. Yes, I know my exposure to mid and small caps is minimal (and I’m ok with that, for a lot of reasons).

[BlueHouse]

I love it when people post to disagree with themselves :-)

For a 30,000 foot view, understand that more funds doesn’t mean More diversity. Counterintuitive, when holding broad market funds more funds can actually decrease diversity, or at the minimum give you more complexity with no tangible benefit

I would start by deciding what you want. What percentage of stocks and bonds, and within each what amount invested in large cap, small cap, international, etc.  That is your asset allocation (AA).  then decide the fewest number of funds which will allow you achieve your AA. Hint, if it is more than six, you are probably being way too complex. For inspiration, google “bogleheads three fund portfolio”.

More does not mean better.
FWIW I’ve got an SP500 fund, international fund and a bond fund. Yes, I know my exposure to mid and small caps is minimal (and I’m ok with that, for a lot of reasons).

+1
I simplified when I joined MMM (took a few years to complete), but I'm almost completely in a three-fund lazy portfolio with
VTSAX (and VTI)
VBTLX
VTIAX

This simplification diversified my investments and once I stopped chasing wins, I met my long term goals before I thought it was possible.  Yay!

[cool7hand]

+1 for simplifying. Pick a portfolio that fits your situation/goals and run it across all of the platforms in which you hold assets: https://portfoliocharts.com/. Most folks here just invest in a broad stock ETF like SCHB. A few use 60/40, Golden Butterfly, or All Seasons (including us: SCHB, VGLT, VGIT, COMB, and SGOL).

[travel2020]

Thanks. I’ve slowly started the consolidation process. For now I’m focusing on reducing to fewer funds within a fund family.

It will probably take a bit longer to get to 3-4 low cost index funds. There’s no way that I can see in Vanguard to exchange funds across fund families so I’ll have to sell each non-Vanguard fund, wait for the fund settlement, then buy the new fund.

[nereo]

There’s no shame or major economic cost in doing this slowly and deliberately over several months. When I first became serious about my personal finances I had a hodge-podge of random funds I had invested in over the years through work and because I had read some article or another and didn’t have a set plan.  It took me about a year to get it all consolidated and organized. 

Presumably you are going to hold this allocation for decades.  Take the time to do it right ;-)