Microcap index fund, a good addition or just fluff?

[joer1212]

Is it worth it to purchase a micro-cap index fund for my Roth IRA? I was considering
Bridgeway Ultra Small Company (BRSIX), but what discourages me is that it is very volatile, and I'm looking to retire in the next 8-10 years (I'll be 50-52).
It also has relatively high fees for my taste (about 0.88%).
I already own a diversified core portfolio in my 401k. This fund would just be an extra addition to round out my investments.

[astadt]

Hmm, well I have mixed feelings about it and I cant see it fitting in my portfolio. Its got high fees (for me) and not the greatest prospects up ahead.

However, i also believe that theres always room for outlier investments in a well balanced portfolio, so if you have one of those and want to invest here, go for it. But dont count on it to be a core holding.

My outlier holdings included high dividend individual stocks, High Yield bonds, and hard assets, I get to focus on these and let the rest of my investments (90% of the rest) to just dollar cost average away.

[tooqk4u22]

If you go with the vanguard total market fund then the micro caps are already in there - so the real question is how much of your portfolio would you want to allocate to micro caps - 1, 5, 10%....  If you think micros are really undervalued or have tremendous prospects then maybe.  Looking at the history the vanguard total has out performed but there was the period in the early to mid- 2000's that this fund exploded and far outperformed. Maybe it could happen again, but maybe not. 

Many people have had a similar question about REITs and it is the same answer - it only matters if you want to overweight in that group.

[joer1212]

After much thought, I had just decided that I would include BRSIX into my Roth IRA, but when I went to purchase this fund at Vanguard I found out that the expense ratio had increased to 0.92% (from 0.75% a few years ago).
Not only that, there is a management fee of 0.50% on top of this, plus a "redemption" fee of 2%.
This is disgusting, and completely unacceptable.
I decided to do without this fund. In fact, I will do without a micro-cap fund at all until a true, low-cost micro-cap fund becomes available. Are you listening, Vanguard?