No. of Recommendations: 2
jjbklb wrote:
why complicate your life? just invest your US equity portion all in the TOTAL STOCK MARKET INDEX. you then have large,medium,small-cap,tech stocks,the works.

If you divide the market into deciles by market cap, here is the rough breakdown by percentage:


So a TOTAL STOCK MARKET INDEX has a very small percentage of small caps. About 85% of it is the S&P500 and most of the rest is midcaps. Small caps have value because they have a long term higher return than large and mid caps, and they are less correlated to large caps than midcaps:

For the 10 years ending 4/30/00:

S&P Midcap correlation to S&P500: 0.87
S&P Small correlation to S&P500: 0.70
9th & 10th decile correlation to S&P500: 0.53


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