More Diversified Fund for Stock Portion

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Maddy
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More Diversified Fund for Stock Portion

Post by Maddy » Thu Oct 14, 2021 5:48 pm

I was shocked when I recently looked at the holdings of Vanguard's Total Stock Market Fund (VTSAX) and discovered the enormous skew toward tech stocks. I thought to myself, "Would Harry really have advocated an index fund so dramatically biased toward a single sector?" And as someone who has nothing good to say about a great deal of technology, the discovery made me all the more unhappy. What other funds might you recommend for the stock component of the PP for a more diversified set of holdings? I'd like to stay within the fundamental framework of the PP.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Thu Oct 14, 2021 7:19 pm

Maddy, with nearly 4000 stocks in its basket, VTSAX is hardly skewed. As pug said, it’s cap weighted. And…tech stocks are what’s been going up. If tech fell out of the sky and energy stocks reigned, VTSAX would look skewed toward energy. And once upon a time, it did look oil, tobacco and bank-heavy.

It’s the epitome of diversified funds.

https://investor.vanguard.com/mutual-fu ... olio/vtsax
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Re: More Diversified Fund for Stock Portion

Post by Kriegsspiel » Fri Oct 15, 2021 4:27 am

IIRC, the total stock + smallcap value combo is more of an equal weighting across the spectrum of stocks.
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Re: More Diversified Fund for Stock Portion

Post by whatchamacallit » Fri Oct 15, 2021 11:58 am

Kriegsspiel wrote:
Fri Oct 15, 2021 4:27 am
IIRC, the total stock + smallcap value combo is more of an equal weighting across the spectrum of stocks.
I aim for 20% total stock and 20% small cap
Basically vti and vb ETFs

Basically golden butterfly but I decided I would rather just have all the small stocks than just value.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Sat Oct 16, 2021 10:36 am

As an addendum to what I wrote above, Vanguard’s VIMAX is a midcap blend fund.
It is currently almost 19% Technology stocks, larger than any other group.

https://investor.vanguard.com/mutual-fu ... view/vimax
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Sat Oct 16, 2021 2:51 pm

Desert wrote:
Sat Oct 16, 2021 11:18 am
To get away from big tech, I'd probably use something like the Vanguard Value Index Fund (VVIAX). It's a low-cost index fund, and only 7% in tech versus TSM fund's 28% in tech.
And 22% in financials 😬
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Re: More Diversified Fund for Stock Portion

Post by pp4me » Sat Oct 16, 2021 5:30 pm

whatchamacallit wrote:
Fri Oct 15, 2021 11:58 am
Kriegsspiel wrote:
Fri Oct 15, 2021 4:27 am
IIRC, the total stock + smallcap value combo is more of an equal weighting across the spectrum of stocks.
I aim for 20% total stock and 20% small cap
Basically vti and vb ETFs

Basically golden butterfly but I decided I would rather just have all the small stocks than just value.
What do you use for SC and has it done better or worse than SCV?

I added SCV for the golden butterfly a couple of years ago and have been well pleased with a 38% return. I thought Value was supposed to be dead but
apparently it has been resurrected at least for a while.

I also use VTI for the large blend.
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Re: More Diversified Fund for Stock Portion

Post by whatchamacallit » Sat Oct 16, 2021 9:16 pm

pp4me wrote:
Sat Oct 16, 2021 5:30 pm
whatchamacallit wrote:
Fri Oct 15, 2021 11:58 am
Kriegsspiel wrote:
Fri Oct 15, 2021 4:27 am
IIRC, the total stock + smallcap value combo is more of an equal weighting across the spectrum of stocks.
I aim for 20% total stock and 20% small cap
Basically vti and vb ETFs

Basically golden butterfly but I decided I would rather just have all the small stocks than just value.
What do you use for SC and has it done better or worse than SCV?

I added SCV for the golden butterfly a couple of years ago and have been well pleased with a 38% return. I thought Value was supposed to be dead but
apparently it has been resurrected at least for a while.

I also use VTI for the large blend.
I like the Fidelity Zero SM Extended Market Index Fund
FZIPX
https://fundresearch.fidelity.com/mutua ... /315911636

Also use some Vanguard VSMAX mutual fund also known as VB etf
https://investor.vanguard.com/mutual-fu ... ance/vsmax

I was in in VBR and fidelity small cap value index fund and rotated out to just small cap right about when they started going sideways. SCV started the year out strong but the last six months it has been going sideways. I wasn't happy with how different the performance could be for all the different small cap value indexes out there so I decided to just go for the whole small cap.

Just looking now, even the performance difference between VSMAX and FZIPX is quite surprising. I thought they were quite comparable when I first checked them out. The noise difference just depends on which stocks are at the top of the index you are in.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Sun Oct 17, 2021 5:48 am

whatchamacallit wrote:
Sat Oct 16, 2021 9:16 pm
Just looking now, even the performance difference between VSMAX and FZIPX is quite surprising. I thought they were quite comparable when I first checked them out. The noise difference just depends on which stocks are at the top of the index you are in.
Unless i’m reading it wrong, isn’t FZIPX small and mid, whereas VSMAX is smallcap?
I’m familiar with VSMAX; I’ve owned it for over a decade. FZIPX I never heard of until just now, but the name “Extended Market” usually suggests ‘all the rest after the S&P500’, and the description does say small plus midcap.

Also, VSMAX has just over 1500 stocks.

The number of stocks in FZIPX is harder to find as it’s not on the front page, but the monthly fact sheet suggests about 2,500.
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Re: More Diversified Fund for Stock Portion

Post by whatchamacallit » Sun Oct 17, 2021 7:13 am

dualstow wrote:
Sun Oct 17, 2021 5:48 am
whatchamacallit wrote:
Sat Oct 16, 2021 9:16 pm
Just looking now, even the performance difference between VSMAX and FZIPX is quite surprising. I thought they were quite comparable when I first checked them out. The noise difference just depends on which stocks are at the top of the index you are in.
Unless i’m reading it wrong, isn’t FZIPX small and mid, whereas VSMAX is smallcap?
I’m familiar with VSMAX; I’ve owned it for over a decade. FZIPX I never heard of until just now, but the name “Extended Market” usually suggests ‘all the rest after the S&P500’, and the description does say small plus midcap.

Also, VSMAX has just over 1500 stocks.

The number of stocks in FZIPX is harder to find as it’s not on the front page, but the monthly fact sheet suggests about 2,500.
Yes but it all depends on what the underlying index defines as small or mid cap. Different indexes start in different places.

Tyler helped clear this up for me with excellent graphic:
viewtopic.php?f=10&t=12133#p228907

If you look at the top ten holdings for VSMAX and FZIPX they are very similar in their top holdings.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Sun Oct 17, 2021 9:23 am

O0
/
And thank you for that explanation, whatchamacallit!
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Tue Oct 26, 2021 5:58 pm

Saw this today, which made me think of this thread. Just a video for beginners but very clear.
Gets going around 40 seconds in.
https://youtu.be/foqswJT3Spc
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Re: More Diversified Fund for Stock Portion

Post by whatchamacallit » Tue Oct 26, 2021 10:07 pm

dualstow wrote:
Tue Oct 26, 2021 5:58 pm
Saw this today, which made me think of this thread. Just a video for beginners but very clear.
Gets going around 40 seconds in.
https://youtu.be/foqswJT3Spc
Good watch. Summary at end is add small cap or small cap value to your total market fund to keep it balanced.


Maybe I am mistaken but it seems like a small cap index fund is naturally tilted more value.

There are more stocks in value vbr than growth vbk funds.
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Re: More Diversified Fund for Stock Portion

Post by jalanlong » Wed Oct 27, 2021 1:46 pm

https://www.invesco.com/us/financial-pr ... icker=EQAL

This ETF equal weights all of the stocks in the Russell 1000 index but then it also equal weights by sector. So you get the same amount of energy or utilities as you do tech. That helps in a year like this when the fund has outperformed standard index funds. However, it has lagged greatly over the tech boom of the last 10 years.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Wed Oct 27, 2021 1:58 pm

MangoMan wrote:
Thu Oct 14, 2021 6:36 pm
Most index funds are capitalization weighted.
You could consider the Equal Weight S&P 500 ETF: RSP
It still has all 500 stocks, but nothing gets overweighted. The expense ratio is a bit higher though.
https://www.google.com/search?q=gsew+et ... e&ie=UTF-8

GSEW is similar and has a much lower expense ratio
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Re: More Diversified Fund for Stock Portion

Post by boglerdude » Wed Oct 27, 2021 11:46 pm

Cap weight is equal weight. You own .1% of Microsoft and .1% of Joe's vegan hot dog stand.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Thu Oct 28, 2021 8:51 am

Darn. Jalanlong & Pug - I think I vanished your post in the process of trying to quote it. (Screen jumped upward as my finger was moving to tap). But it still exists in the quote:
jalanlong wrote:
Wed Oct 27, 2021 1:58 pm
MangoMan wrote:
Thu Oct 14, 2021 6:36 pm
Most index funds are capitalization weighted.
You could consider the Equal Weight S&P 500 ETF: RSP
It still has all 500 stocks, but nothing gets overweighted. The expense ratio is a bit higher though.
https://www.google.com/search?q=gsew+et ... e&ie=UTF-8

GSEW is similar and has a much lower expense ratio
It’s funny- the tech sector is still 20+% and healthcare is nearly 15%. O0 Can’t escape it, Maddy!
https://www.gsam.com/content/gsam/us/en ... b=holdings
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Re: More Diversified Fund for Stock Portion

Post by jalanlong » Thu Oct 28, 2021 8:01 pm

Maddy wrote:
Thu Oct 14, 2021 5:48 pm
I was shocked when I recently looked at the holdings of Vanguard's Total Stock Market Fund (VTSAX) and discovered the enormous skew toward tech stocks. I thought to myself, "Would Harry really have advocated an index fund so dramatically biased toward a single sector?" And as someone who has nothing good to say about a great deal of technology, the discovery made me all the more unhappy. What other funds might you recommend for the stock component of the PP for a more diversified set of holdings? I'd like to stay within the fundamental framework of the PP.
Maddy,

What are your issues with technology in general? It is probably a subject for a different thread but I think it might be interesting to discuss.

For example, I generally steam my music. So if I want to listen to some music for a while I will go thru my songs and pick the ones I want to listen to, put them in order of how I want to listen etc. Well recently I purchased a home and the previous owner left their vinyl stereo setup. So I started listening to some of my old records. I found it very relaxing to just have to make that one decision..put on a record and just let it play. But then afterwards I found myself fretting that these listens are not counting towards my listening totals on Spotify and aren't being "counted." What a strange way to think about consuming an art form!
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Re: More Diversified Fund for Stock Portion

Post by vnatale » Thu Oct 28, 2021 9:31 pm

jalanlong wrote:
Thu Oct 28, 2021 8:01 pm



Maddy,

What are your issues with technology in general? It is probably a subject for a different thread but I think it might be interesting to discuss.

For example, I generally steam my music. So if I want to listen to some music for a while I will go thru my songs and pick the ones I want to listen to, put them in order of how I want to listen etc. Well recently I purchased a home and the previous owner left their vinyl stereo setup. So I started listening to some of my old records. I found it very relaxing to just have to make that one decision..put on a record and just let it play. But then afterwards I found myself fretting that these listens are not counting towards my listening totals on Spotify and aren't being "counted." What a strange way to think about consuming an art form!


Just so happens that while I was reading this...I was listening to Amazon Prime's streaming music. Not something I do that often. Weeks can go by without using it. But I chose it because I wanted to hear music without exerting any effort. I chose my favorite "station" - "Deep Purple", which is filled with the heavy rock music I like the most (right now: Hendrix - "Voodoo Child (Slight Return) which just transitioned to The Doors: "L.A. Woman"). Never hear any clunkers in it or songs I need to skip.

But getting back to records.

RI'm sitting at a table in my bedroom where this computer is.

My entire sound system is in my living room but I have wires running from that room to this bedroom to high quality speakers that are in this bedroom.

That means if I play a record I have to get up out of this chair go to the living room to either turn over the record or put on another one. That was required every 15 to 20 minutes while listening to records. I do not miss that aspect of listening to records!
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Re: More Diversified Fund for Stock Portion

Post by jalanlong » Fri Oct 29, 2021 11:34 am

vnatale wrote:
Thu Oct 28, 2021 9:31 pm
jalanlong wrote:
Thu Oct 28, 2021 8:01 pm


Maddy,

What are your issues with technology in general? It is probably a subject for a different thread but I think it might be interesting to discuss.

For example, I generally steam my music. So if I want to listen to some music for a while I will go thru my songs and pick the ones I want to listen to, put them in order of how I want to listen etc. Well recently I purchased a home and the previous owner left their vinyl stereo setup. So I started listening to some of my old records. I found it very relaxing to just have to make that one decision..put on a record and just let it play. But then afterwards I found myself fretting that these listens are not counting towards my listening totals on Spotify and aren't being "counted." What a strange way to think about consuming an art form!
Just so happens that while I was reading this...I was listening to Amazon Prime's streaming music. Not something I do that often. Weeks can go by without using it. But I chose it because I wanted to hear music without exerting any effort. I chose my favorite "station" - "Deep Purple", which is filled with the heavy rock music I like the most (right now: Hendrix - "Voodoo Child (Slight Return) which just transitioned to The Doors: "L.A. Woman"). Never hear any clunkers in it or songs I need to skip.

But getting back to records.

RI'm sitting at a table in my bedroom where this computer is.

My entire sound system is in my living room but I have wires running from that room to this bedroom to high quality speakers that are in this bedroom.

That means if I play a record I have to get up out of this chair go to the living room to either turn over the record or put on another one. That was required every 15 to 20 minutes while listening to records. I do not miss that aspect of listening to records!
I think there are SO many things we take for granted now and if we had to go back 20 or 30 years we would wonder how they ever lived without our modern conveniences. For music, now you just stream whatever songs you want in whatever order. Remember trying to put your fave songs on a cassette and then not having enough space at the end to fit the last song?

Now you can check your bank balance in 15 secs on your phone. In the past I had to keep a check register. Or call the bank and talk to someone to get my last few transactions that cleared and they may have charged me for the privilege!

How about seeing pretty much any movie you want right now on demand? When I was young you had to wait until whenever tv decided to show it and watch it edited with commercials.
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Re: More Diversified Fund for Stock Portion

Post by dualstow » Mon Dec 06, 2021 9:53 am

Some more info on VTSAX (Vanguard Total Stock Market) for Maddy & Friends
Vanguard’s Total Stock Market Fund, at $1.3 trillion in assets, is a market unto itself—powered by an unassuming index called CRSP

While many investors may not be familiar with CRSP, the influence of the index and the Vanguard fund is felt minute to minute on Wall Street. Traders say they sometimes check the Vanguard fund’s ETF version, with the symbol VTI, to get a better idea of what is happening in the market overall, since it effectively covers more stocks than any of the three major indexes—the Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite.

To be added to the CRSP index, a company must operate a for-profit U.S. business, have a stock-market value of at least $15 million, and at least 12.5% of its shares outstanding must trade publicly, among other criteria. CRSP adds and drops stocks every quarter, and reflects some big initial public offerings and secondary offerings in a matter of days.


Mr. Sauter asked Ted Snyder, then the dean of the University of Chicago business school, if CRSP could be cranked up from a research resource to a daily investible index, promising that Vanguard would advance the development expenses. Near the end of a five-year ramp-up, Vanguard announced the fund’s index would shift to CRSP in 2013.

Mr. Sauter says cost-cutting was a “very significant” reason Vanguard shifted to CRSP. Vanguard currently pays CRSP about $20 million annually to license its indexes. But he adds that CRSP’s long experience in stock-market research and its database made Vanguard confident that CRSP could provide a quality index.

Last year, CRSP and the Vanguard fund scored a win over its biggest U.S.-fund rival, S&P Dow Jones Indices, when Tesla Inc. TSLA -stock rocketed up more than 700%. Tesla wasn’t part of the S&P 500 for most of the year because S&P requires new additions to be profitable, while CRSP doesn’t.
https://www.wsj.com/articles/mutual-fun ... 1638390382
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Re: More Diversified Fund for Stock Portion

Post by mathjak107 » Tue Dec 07, 2021 4:51 am

the fidelity expense free index funds actually use their own proxy indexes so they do have to pay the use fees for the standardized ones ….that is how they are no expense.

the issues one runs in to with stocks like tesla is that a total market fund was able to own tesla early on but the s&p first had to buy it at high price
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