dmojr wrote: ↑Wed Apr 10, 2019 11:47 amHi everyone,
My 401k program recently added some new funds. One of which is the BlackRock Equity Index Fund J. It seems this is a newer fund and I am having a hard time finding out more information on it. According to the fact sheet (prospectus not readily available), the benchmark is the "S&P 500 TR USD".
Would it be safe to assume this tracks the S&P 500?
The expense ratio for this fund is an amazing 0.01% so I'm intrigued.
My current portfolio looks like this:
31 years old roughly 100k in this plan.
60% VWENX (Vanguard Wellington Admiral) - this is my core holding and makes up my only exposure to US Large Cap. That said, the stock portion of Wellington is currently only 95 stocks (with some of them being international.) I love this fund and plan on it remaining my core holding, but I wonder if I need more exposure to an S&P type fund.
15% BLACKROCK MID-CAP EQUITY INDEX M - 0.03 expense ratio
15% BLACKROCK RUSSELL 2000 INDEX FUND M - 0.05 expense ratio
10% BLACKROCK MSCI EAFE EQUITY INDEX FUND M - 0.07 expense ratioSee AlsoBlackRock Europe Equity 1 Fund | JiShares Japan Equity Index Fund (LU) | A2Halifax UK FTSE All Share Index Tracking Fund J A...|GB00BMQDGW09Vielfältige Anlagelösungen mit iShares ETFs | iShares DE - BlackRockWould you recommend that I either 1) change the current amount and future to include the S&P fund above, or 2) change only future to an allocation of something along:
55% Vanguard Wellington Admiral
10% BlackRock Equity Index Fund J (S&P)
5% BLACKROCK MID-CAP EQUITY INDEX M
15% BLACKROCK RUSSELL 2000 INDEX FUND M
15% BLACKROCK MSCI EAFE EQUITY INDEX FUND MMy thinking is that more exposure to an actual S&P fund coupled with mid and small cap would give me a better total US market exposure. I also see some leave out midcap, which is why I have it at a lower percentage, along with the fact that Paul Merriman strongly suggests small-cap in the earlier stages of investing. This would also bump up my foreign exposure from 10-15% in the MSCI fund, along with the roughly 10% international found in Wellington.
Lastly, my plan also offers Vanguard Equity Income Fund Admiral Shares (VEIRX), which has slightly more stocks (185) than Wellington and no bonds. With an expense ratio of 0.18 it's not horrible, but I'm already settled in with 0.17 on Wellington.
I appreciate any help or direction.
Thank you,
dmojr wrote: ↑Wed Apr 10, 2019 2:03 pm
ExitStageLeft wrote: ↑Wed Apr 10, 2019 1:37 pmWhat is your desired asset allocation (AA) ratio of stocks to bonds? VWENX has a bonds/cash allocation of about 35%, which puts you at about 80/20. Another thing is to consider what portion of stocks you want to be in international markets. You are presently on the low side with just over 20% of stocks in international.
20% bonds are about the highest I'd like to be at the moment (almost 32 years old)
I also agree on the international and have toyed with either bumping BLACKROCK MSCI EAFE EQUITY INDEX FUND M to 20%, which coupled with the international in VWENX would give me 25% +/- international exposure.
ExitStageLeft wrote: ↑Wed Apr 10, 2019 1:37 pmI'd bump Intl up to 25% of equities. If there is a low cost index bond fund in your 401k then I would go with
48% BlackRock Equity Index Fund J (S&P)
12% BLACKROCK RUSSELL 2000 INDEX FUND M
20% BLACKROCK MSCI EAFE EQUITY INDEX FUND M
20% Total market bond fundMy bond options are:
Baird Funds, Inc: Baird Core Plus Bond Fund; Institutional Class Shares (BCOIX) (0.30 expense)
BlackRock U.S. Debt Index M (0.04 expense)
PGIM Global Total Return Fund; Class R6 Shares (PGTQX) (0.58) - (also low quality and long term it appears.)
BlackRock U.S. Treasury Infl Pro Sec M (0.03 expense)ExitStageLeft wrote: ↑Wed Apr 10, 2019 1:37 pmIt's easy to overthink it. Keeping VWENX or not isn't going to sink your portfolio. It will make things a little complicated when you need to rebalance to holding more bonds.
I like the idea of VWENX quite a bit. It also holds over 900 bonds, with about 5.3% foreign. My thinking is with VWENX as a core holding, I'll use that as my bond exposure for the next decade or so. I wanted to add more S&P exposure and my thinking for rebalancing over the next decade would be to keep VWENX at or around 55%
ExitStageLeft wrote: ↑Wed Apr 10, 2019 1:37 pmEdit to add: You can take a look at Portfolio Visualizer to see what your exposures are. Your planned allocation has you underweight on large cap growth.
The only large cap growth available in my plan is: Harbor Funds: Harbor Capital Appreciation Fund; Institutional Class Shares (HACAX) which carries a 0.70 expense ratio and has some foreign exposure as well. Quality returns since 1987 it appears, but I hadn't given that fund much thought.
Vanguard Wellington™ Fund Admiral™ Shares (VWENX) is a balanced fund, including about 35% bonds, 11% international stocks, and 54% U.S. stocks.
Trying to build a different asset allocation around a core of Wellington gets very confusing.
I agree that a 20% bond allocation is within the range of what is reasonable at age 32.
I suggest around 25% of stocks in international stocks.
That works out to 20% bonds, 20% international stocks, and 60% domestic stocks.
You could simply use the S&P 500 fund by itself for domestic stocks.
An 83/17 mix of S&P 500/Russell 2000 will mimic the content of a total stock market index fund. Wiki article, "Approximating total stock market". With 60% of stocks in domestic stocks, that becomes 50% S&P 500 and 10% Russell 2000.
Since you asked to include funds to mimic the total U.S. stock market, my suggestion is:
1) 50%, BlackRock Equity Index Fund J (S&P 500 index fund), ER 0.01%:
2) 10%, BlackRock Russell 2000 Index Fund M ER 0.05%;
3) 20%, BlackRock MSCI EAFE Equity Index Fund M (developed markets only) ER 0.07%; and
4) 20%, BlackRock U.S. Debt Index M (Bloomberg Barclays U.S. Aggregate Bond Index, total U.S. Bond market fund) (0.04 expense)
