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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Hello all! (index question) Date: 2/1/2011 11:00 PM
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Last time I was here was 2008 to ask about asset allocation and people were so helpful to me.

Well, this time it is just a quick question.

My 403(b) is in Fidelity and they have recently changed the funds available to us (I have a lovely annuity...<hanging head>)

Anyway, as I am trying to set up my allocations along the large, mid, small cap lines, I am am wondering if anyone can tell me the percentage of small caps versus mid caps in the Spartan Extended Market Index (FSEMX)?

Knowing this, I can then get everything else squared away. I was not able to find this information through the info. provided online from Fidelity.

Thank you for your time.

-Amy
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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68361 of 76418
Subject: Re: Hello all! (index question) Date: 2/1/2011 11:44 PM
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According to Morningstar at http://portfolios.morningstar.com/fund/summary?t=FSEMX&r... it appears that the fund is about even between mid and small caps.

Bob

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68365 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 7:27 AM
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Thanks, Bob. And thank you for the link to know how I can look up funds in the future! I have noted Morningstar ratings before when looking at funds, but have never looked at the site, itself. So, thank you!

-Amy

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68366 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 8:27 AM
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Good advice from Bob. You might also investigate the M* tools.
http://www.morningstar.com/Cover/Tools.html

Instant Xray is especially nice for determining your allocations including your entire fund or stock portfolio. You have to do it each time if you're not on the premium, but I'm not and it's nice to be there when you need it.
http://portfolio.morningstar.com/RtPort/Free/InstantXRayDEnt...

Hockeypop

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68367 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 10:33 AM
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Thank you, Hockeypop! I will definitely utilize that!

I decided to come back to ask one more question, if folks don't mind.

In 2008 I asked for advice on asset allocation. At that time I asked what percentages members thought I should have in large, mid, small, foreign. I use index funds only. I am curious to know if people would have a different bent, especially on the foreign funds (at that time, the average of 6 suggestions was 30% for foreign). Additionally, I am wondering if I should consider an index in REITs (have not used in past).

So, if people wouldn't mind giving me their thoughts on the above (foreign percentage and necessity of REITs), I would appreciate it.

Even better, give me suggestions for the whole portfolio, if you have the time! :-)

large
mid
small
foreign
(REITs?)

41 year old, single female. Make 61K a year (and will probably never make above 70K-75K per year). Current 66K in retirement funding (403b and Roth).

Currently put up to match in 403(b) and then rest in Roth due to somewhat high fees in Fidelity and b/c it is a annuity.

Any other advice of anything I missed welcomed.

Thank you.

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68368 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 1:10 PM
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Right now for an entire portfolio including cash, at 40 I'd be:

LC: 20%
MC: 10%
SC: 10%
REIT: 5% (or more when you feel comfortable)
Internation broad: 20%
Int. Emerging Mts: 10%
Bonds/Fixed income (CDs) & cash: 25% (this includes emergency cash)

Hope that helps!

Hockeypop

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68369 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 1:19 PM
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So, if people wouldn't mind giving me their thoughts on the above (foreign percentage and necessity of REITs), I would appreciate it.

Even better, give me suggestions for the whole portfolio, if you have the time! :-)

large
mid
small
foreign
(REITs?)

I can tell you what I do which is not necessarily a recommendation of what you should do.
I have what I believe to be a simple portfolio using broad based index funds with a "tilt". What this means is that the major portions of the equity portfolio are a total stock market fund and a total international fund. The international is about 17% of equity. To this I have added REIT and small cap value funds at about 13% of equity each. This is to add the diversity of a low correlation asset (REIT) and to try to take advantage of the SCV premium.
I have been giving some consideration to simplifying even more by dropping the REIT and SCV. Reasons? The total stock market fund already has a market weight of REIT. One can never be sure there will be a SCV premium during my investing life span.

Bob

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68371 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 3:51 PM
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Right now for an entire portfolio including cash, at 40 I'd be:

LC: 20%
MC: 10%
SC: 10%
REIT: 5% (or more when you feel comfortable)
Internation broad: 20%
Int. Emerging Mts: 10%
Bonds/Fixed income (CDs) & cash: 25% (this includes emergency cash)

Hope that helps!

Hockeypop

Wow, really with the bonds? I always hear people say no bonds around here for my age. I don't have a lot of emergency cash (only 13K), but I have parents who would fill in the blanks if I lost my job (I also do have plans to increase the amount). If we take emergency cash out of it, how would that change the portfolio you are reccommending? And does a bond index fit your thinking when you say bonds?

Thank you for your time.

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68373 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 4:09 PM
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Thank you for your thoughts, Bob.

If I was just with Vanguard I would maybe consider 70% total stock market index and 30% foreign. But, since I have my 403(b) to contend with (do not want to use their foreign options), I have to separate out small, mid, and large. The way you describe how you made your choices makes sense. I too was looking at small cap value. Could you please explain what you mean by your statement, "one can never be sure there will be a SCV premium during my investing life span"?

My thinking was, all indexes:

large - 30%
mid - 20%
small - 20%
foreign - 20%
Vanguard's small cap value index 10%


I'd love to hear from more people. Thank you.

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68375 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 5:36 PM
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Could you please explain what you mean by your statement, "one can never be sure there will be a SCV premium during my investing life span"?

Those folks that analyze this stuff have gone back for 75 years or so and have determined that SCV stocks have an expected return greater than the whole market. OTOH there have been periods of several years where the expected return did not exist. Remember that along with greater expected return comes with greater risk. Since I am a "senior" I think there is a pretty good chance that the SCV premium will not materialize in the next 10 years or so. Therefore I am considering passing up on the "expected" premium return to keep the market return.

My prior reply addressed your equity portfolio only, but, since the subject of bonds have been raised, I am of the opinion that any investor with over $10K invested or over the age of 30 should have some exposure to bonds. Jack Bogle (and others) suggests that having your age as a percentage in bonds is a good starting point for an allocation. I guess that I am a bit more agressive than that and suggest that you should consider having 20-30% in bonds.

Bob

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68377 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 7:33 PM
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Bob, thank you for your further thoughts. I appreciate the help.

Amy

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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68379 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 11:04 PM
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MTB,
Wow - single, make good money and planning for retirement... Marry ME!

I will be happy to throw in my view -

% Bonds is not driven by AGE - It is driven by Risk Tolerance and your End Goal (caveat that age can be a factor in risk tolerance and in the investment horizon so your end goal as well) But the point - rule of thumb your age in bonds is kinda like the rule of thumb that you should put on ten leaches for each night that you have been sick!

For ME!
At 41, A good strategy is to diversify with something other than equities which usually equates to bonds, commodities and real estate. With mid term interest rates less than 6% the reduction in portfolio volatility comes at too great a price of returns. You can go out on the credit sprectrum to catch more yield but probably not an option in the 403?? While Real Estate was on the list (REITS) I would suggest being some what selective in the area (Hospitality/Industrial etc.) I liked one that had to do with Technology Space. The recent crisis has shown there sometimes is strong correlation with REITS and the general market. But one that rebounded nicely was DLR. For commodities - specifically metals, there seems to be some support for base metals right now and there seems to be some concern over the gold and silver being a little bubbly. So, I am in some copper plays right now. Another good area right now is Energy so you might think there as well, which goes kinda to the next point.

Also - boring old utilities calm down the volatility some and typically help with returns/divdends so as you look at balancing you might overweight there.


These are examples and not specific recommendations - but providing some tickers so you can look them up:

20 LC - lean toward value JKF
20 MC - JKG
20 SC - lean toward growth JKK
10 REIT - DLR -
20 Utilities maybe 50/50 with Energy XLU/XLE.
10 Metals - ETN



Again - normal markets a little less correlation in these wo diversification is preety good but in a crisis they may all move together - but at 41.. time is still on your side and bonds are probably not!

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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68380 of 76418
Subject: Re: Hello all! (index question) Date: 2/2/2011 11:11 PM
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oh and foriegn - take that out of the 20 20 20--- developed and emerging markets..

~13 something each>>

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Author: drippinfool Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68386 of 76418
Subject: Re: Hello all! (index question) Date: 2/3/2011 1:45 PM
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The only thing I would add that has not already been mentioned is a Treasury Inflation Protected Securities fund as part of your bond allocation. It could be a good hedge against unexpected inflation.

-drip

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68388 of 76418
Subject: Re: Hello all! (index question) Date: 2/3/2011 10:08 PM
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DrTarr and Drip -

Thank you both so much for your thoughts. They are useful and have sparked more thinking and research for me.

P.S. to Loverboy - send me your financial stats and I will think about it. ;-)

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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68390 of 76418
Subject: Re: Hello all! (index question) Date: 2/3/2011 10:53 PM
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How bout I just say I work for Goldman Sachs!!

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68392 of 76418
Subject: Re: Hello all! (index question) Date: 2/4/2011 12:55 PM
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How bout I just say I work for Goldman Sachs!!

---------------

That may work!

P.S. How do I get paste/copy to come in in italics like the rest of you? I can't figure it out.

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68393 of 76418
Subject: Re: Hello all! (index question) Date: 2/4/2011 1:22 PM
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P.S. How do I get paste/copy to come in in italics like the rest of you? I can't figure it out.

The instructions are in Help.

http://www.fool.com/help/index.htm?display=community02#Styli...

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Author: MTBer One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68396 of 76418
Subject: Re: Hello all! (index question) Date: 2/4/2011 9:12 PM
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The instructions are in Help.

Thank you. I think that it used to be an automatic thing (last time here 2008)?

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68397 of 76418
Subject: Re: Hello all! (index question) Date: 2/4/2011 9:50 PM
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I think that it used to be an automatic thing (last time here 2008)?

Italics have never been automatic. You have always needed to enter the html code.

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