Author Topic: Rebalancing into this new portfolio?  (Read 953 times)


  • 5 O'Clock Shadow
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Rebalancing into this new portfolio?
« on: February 01, 2019, 08:42:17 AM »
I was seeing what everyones thoughts were about this portfolio allocation that I am thinking of rebalancing into. My current situation is that I'm 31 years old engaged with no children and do not plan on touching this money until 25 years from now and thus have a higher risk tolerance at the moment. I'm not looking to have any bond allocation at this time as I am young and I'm willing to weather the storm for the time being and was planning on rebalancing in 10 to 12 years into bonds. My accounts are at Vanguard and use their funds mostly Admiral funds as they have lowest expense ratios. I put my small cap funds into my tax advantaged accounts (401k and Roth IRA). I wanted to tilt to small cap and value which is why I have have allocations to value and small cap. The VSIAX small cap value fund has 54% in mid caps and thus I use it more for my value tilt as well as it provides the mid/small cap tilt in addition that I am looking for. Whereas VTMSX is 90% small caps and thus I use the fund for my Small cap tilt. This is the portfolio I plan on rebalancing into:

VTSAX- Vanguard Total Stock Admiral - 55%
VSIAX- Vanguard Small Cap Value Admiral- 15%
VTMSX- Vanguard Tax Managed Small Cap- 10%
VTIAX- Vanguard All World ex-US Admiral- 15%
VFSVX-Vanguard FTSE All World ex-US Small Cap Admiral 5%

I wanted to get everyones general thoughts on the portfolio?
Also I wanted to see what everyones thoughts were about the small cap and value tilt's using those funds?

Thank you in advance.


  • Walrus Stache
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Re: Rebalancing into this new portfolio?
« Reply #1 on: February 01, 2019, 08:57:46 AM »
You make some good observations on mid-caps in Vanguard's small cap value fund, plus you're aware of low expense ratios and have diversified well.  But I see a 0% bond allocation, which will need to change before retirement (to reduce risk).

I've read numerous books by Larry Swedroe, who favors a small cap value tilt.  But one of his more recent books on "factor investing" has some new ideas that might be worth considering.  Actually, some are quasi-new ideas.  For decades Warren Buffet has been beating the S&P 500 (but more recently is probably tied), and academics didn't really know what he did differently.  But two of the new factors (quality and ... another factor I forgot) explain Buffet's performance.  In other words, you can invest in a fund that tilts to those two factors to try and target Buffet's performance - and on smaller companies than Buffet is able to buy (since they don't move the needle for the billions he has to invest).

So keep the small value + small cap tilt, or consider new factors.