Author Topic: What Asset Allocation / Funds Do You Use In Your Accounts?  (Read 3861 times)

Derrian

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What Asset Allocation / Funds Do You Use In Your Accounts?
« on: September 06, 2015, 05:58:07 AM »
I've been trying to adjust and diversify the asset allocation in my accounts and I'm curious what asset allocation / funds people are using in their tax advantaged / taxable accounts?

GGNoob

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #1 on: September 06, 2015, 09:18:53 AM »
All you really need is a three-fund portfolio of US total stock index, International total stock index, and US bond index. Then place them in the correct accounts so they will be tax-efficient.

With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

Derrian

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #2 on: September 06, 2015, 11:29:52 AM »
I currently use the three fund portfolio in all accounts (tax free muni bonds in taxable) but I've been curious about adding other funds for more aggressive growth. I'm looking at mid cap, emerging markets and US REIT fund, the same that you listed, in my tax advantaged account. Given that many mustachians use vanguard funds, I'm mostly curious what other funds people have thrown into the mix outside of the standard three fund portfolio.


Derrian

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #3 on: September 06, 2015, 11:31:25 AM »

With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

I noticed you don't have a large cap or total stock market fund in the mix. I'm assuming this is for potentially greater returns? If so, have you found that market downturns have had a larger effect on your portfolio? Not that it matters in the short term, I'm just curious how you managed this

forummm

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #4 on: September 06, 2015, 12:59:02 PM »
I'm generally aiming to be around the global market cap. I do this with a number of funds in different accounts due to availability of funds in our 401ks, and funds I had purchased a long time ago that have too much CG to sell yet. But you could approximate the total portfolio with 50/50 VTSAX/VTIAX.

johnny847

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #5 on: September 06, 2015, 03:03:52 PM »
All you really need is a three-fund portfolio of US total stock index, International total stock index, and US bond index. Then place them in the correct accounts so they will be tax-efficient.

With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

OP, that's the key here. There's no reason to hold the three fund portfolio in each of your accounts. Notice OP how you have tax free munis in your taxable. Munis are higher risk, and less diversified, than the Total Bond Fund that is a part of the three fund portfolio. Not that there's anything wrong with using munis if that is what you truly wanted without tax considerations. But what I suspect happened is you wanted a total bond fund but didn't want the tax implications of that in a taxable, and decided to use munis instead (if I'm wrong, ignore all of this).
Instead, you should just regard all of your accounts as part of one portfolio, and put all of your bonds in a tax advantaged account. This will most likely mean you don't have as much stocks in your tax advantaged accounts as your taxable account, but that's okay, stocks are pretty tax efficient (so long as you're holding them to long term capital gains).

Derrian

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #6 on: September 06, 2015, 03:24:37 PM »
Totally on board and you're right about looking at all accounts as 1 portfolio (working on that).

My current set up is:
 Tax advantaged accounts hold:
-US Total Stock Market - 60%
-Total International Stock Market - 30%
-US Total Bond - 10%

Taxable has:
-30% Tax free muni bonds
-50% US Total Stock
-20% International Stock

Taxable is gradually shifting toward more stock as all recent and future contributions are stock only.

What I'm trying to get a sense of is what, if any, other funds others add to the mix beyond US total stock/bond and International total stock/bond.

johnny847

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #7 on: September 06, 2015, 04:33:17 PM »
Totally on board and you're right about looking at all accounts as 1 portfolio (working on that).

My current set up is:
 Tax advantaged accounts hold:
-US Total Stock Market - 60%
-Total International Stock Market - 30%
-US Total Bond - 10%

Taxable has:
-30% Tax free muni bonds
-50% US Total Stock
-20% International Stock

Taxable is gradually shifting toward more stock as all recent and future contributions are stock only.

What I'm trying to get a sense of is what, if any, other funds others add to the mix beyond US total stock/bond and International total stock/bond.

REITs if you want them, but REITs have their own advantages and disadvantages. I personally don't hold any REITs, but they are an asset class that some people like.

katthjul

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #8 on: September 07, 2015, 06:27:16 AM »
I'm in Europe and don't have any tax-advantaged accounts, only taxable accounts and time deposits (CDs in USA).

My overall asset allocation is 80/20 global stocks/fixed income. Most of my fixed income allocation is in a old CD that will reach maturity next year.

Taxable (KF):
  • Vanguard FTSE All-World (VWRL) - 86.7%
  • DNB Global Indeks - 11.9%
  • iShares Euro Aggregate Bond (EUN4) - 0%
  • iShares Core Euro Government Bond (EUNH) - 0.9%
  • iShares Euro Corporate Bond ex-Financials (EUNR) - 0.5%

Other:
  • 5 year CD 4.62% APY

The funds listed in blue are used for monthly contributions as explained in My (not so) simple ETF portfolio. I also included EUN4 since that is the ETF I will use for my bond allocation in the future.

GGNoob

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #9 on: September 07, 2015, 02:38:43 PM »


With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

I noticed you don't have a large cap or total stock market fund in the mix. I'm assuming this is for potentially greater returns? If so, have you found that market downturns have had a larger effect on your portfolio? Not that it matters in the short term, I'm just curious how you managed this

We only started investing about 2 years ago and only really got serious this year and set up our allocation. So while I haven't lived through much (these last few weeks haven't been too bad), the portfolio's worse year when back tested at portfoliovisualizer.com is less than 4% worse than a 100% stock portfolio split between Total U.S. and total International.  However, the CAGR (compound annual growth rate) has been about 3.5% higher.


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johnny847

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Re: What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #10 on: September 07, 2015, 03:03:19 PM »


With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

I noticed you don't have a large cap or total stock market fund in the mix. I'm assuming this is for potentially greater returns? If so, have you found that market downturns have had a larger effect on your portfolio? Not that it matters in the short term, I'm just curious how you managed this

We only started investing about 2 years ago and only really got serious this year and set up our allocation. So while I haven't lived through much (these last few weeks haven't been too bad), the portfolio's worse year when back tested at portfoliovisualizer.com is less than 4% worse than a 100% stock portfolio split between Total U.S. and total International.  However, the CAGR (compound annual growth rate) has been about 3.5% higher.


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This is where it can get confusing - do you mean 4% and 3.5%, or 4 percentage points and 3 percentage points?

GGNoob

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What Asset Allocation / Funds Do You Use In Your Accounts?
« Reply #11 on: September 07, 2015, 03:28:46 PM »


With that said, here's my allocation. I invest in US Mid-Cap (VIMAX and VO), US Small-Cap (VSMAX and VB), US REITs (VNQ), International Small-Cap (VSS), and Emerging Markets (VWO), each held at 20%. I rebalance all funds with deposits. My taxable does hold each of the ETFs (including VNQ, which is not tax-efficient), but my taxable gets a fraction of the contributions the other accounts get.

I noticed you don't have a large cap or total stock market fund in the mix. I'm assuming this is for potentially greater returns? If so, have you found that market downturns have had a larger effect on your portfolio? Not that it matters in the short term, I'm just curious how you managed this

We only started investing about 2 years ago and only really got serious this year and set up our allocation. So while I haven't lived through much (these last few weeks haven't been too bad), the portfolio's worse year when back tested at portfoliovisualizer.com is less than 4% worse than a 100% stock portfolio split between Total U.S. and total International.  However, the CAGR (compound annual growth rate) has been about 3.5% higher.


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This is where it can get confusing - do you mean 4% and 3.5%, or 4 percentage points and 3 percentage points?



Percentage points


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« Last Edit: September 07, 2015, 03:30:50 PM by Millionaires in Ten »