Author Topic: Need help choosing Index Funds from limited HSA choices  (Read 1879 times)

Keith Miller

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Need help choosing Index Funds from limited HSA choices
« on: November 11, 2016, 09:31:24 AM »
Hello Mustachians,

I'm looking to max out my HSA this year, but my HSA doesn't actually have a total stock index fund. I'd like to get as close as possible to a total stock market index fund like VTSAX, from the following list, and I'm wondering if you could help. My HSA offers the following funds:

VIIIX: Large Blend Stock Index- 0.02%
VEMPX: Mid Cap Blend- 0.05%
VTPSX: Foreign Large Blend- 0.07%
VIGIX: Growth Index- 0.07%
VSMAX: Small Cap- 0.08%
VEMIX: Diversified Emerging Markets- 0.12%

The rest of the funds are pretty much all actively managed and have standard active fees, which I am not interested in.

What do you think would be the best blend of these funds to match VTSAX?

Thanks!

Keith

mgarf

  • 5 O'Clock Shadow
  • *
  • Posts: 41
  • Location: Alberta
Re: Need help choosing Index Funds from limited HSA choices
« Reply #1 on: November 11, 2016, 09:38:53 AM »
By looking here: https://www.vanguardcanada.ca/individual/mvc/detail/etf/overview?portId=9557##portfoliodata

We see that the total market ETF VUN is ~65.5% large, ~27% medium and ~7.5% small. So.... do those proportions of VIIIX, VEMPX and VSMAX.

I had to use the canadian version VUN (for some reason VTI does not list it's break-down in terms of market-cap on the website).

Note: VEMPX is medium + small... so the numbers are a bit fudged... but I don't think you need to be 100% on this decision.
« Last Edit: November 11, 2016, 09:41:37 AM by mgarf »

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5164
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: Need help choosing Index Funds from limited HSA choices
« Reply #2 on: November 11, 2016, 12:59:57 PM »
VIIIX is an S&P 500 fund. The stocks of the S&P 500 make up about 80% of VTSAX by market cap. In practice, the funds tend to move pretty much in lockstep. See this chart comparing VTSAX and VIIIX over the past five years. They go up and down together. If you want to add in the mid-cap and small-cap to really make sure you're owning the whole market, go ahead, but owning just VIIIX is a very defensible choice if you want to keep things simple.

Born2Run

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: Need help choosing Index Funds from limited HSA choices
« Reply #3 on: November 11, 2016, 04:37:47 PM »
Using Morningstar's Instant X-Ray tool (http://portfolio.morningstar.com/Rtport/Free/InstantXRayDEntry.aspx)
reveals ...
81% VIIIX
15% VEMPX
4% VSMAX
... matches VTSAX almost exactly.
Or for a simpler option just use 100% VIIIX as seattlecyclone suggests.

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1960
Re: Need help choosing Index Funds from limited HSA choices
« Reply #4 on: November 11, 2016, 08:08:19 PM »
"VEMPX: Mid Cap Blend- 0.05%"

VEMPX is actually "Vanguard Extended Market" which includes both mid-cap and small-cap allocations.  I'd favor a simpler two fund approach of 80% large blend and 20% extended market.  The exact percentages are only valid on the date they're calculated.  For example, this past month VIIIX dropped -2.79% but VEMPX only dropped -0.69%.  So should OP only allocate 71% large blend, instead of 72%, to account for changes?

The market doesn't stand still for measurements, so the last percentage will always have some error.  I'd suggest keeping an allocation where being out of balance is easy to spot.  That's why I suggest 80% VIIIX , 20% VEMPX.