ETF Asset Allocation II

 

This ETF portfolio started with $10,000 on December 31, 2010. It consists of five Vanguard funds. It achieves simple but good asset allocation between US and foreign equities, as well as large and small cap stocks with a slight value tilt. It include a US REIT ETF.

Under Vanguard’s new ETF pricing, there would be no charge for setting up this portfolio since all of the ETFs belong to Vanguard. There would be an annual brokerage account fee of $20. Use of ETFs allows broad diversification with a relatively small amount of money. Most index mutual funds have a $3,000 minimum requirement.

Link to spreadsheet at Google Docs.

U.S. Equity Component. Here is how the asset allocation breaks down by size and style (growth, neutral, and value) for the US equity component. Here is the breakdown: large cap 43%, mid-cap 22%, and small cap 36%. The style is: value 39%, neutral or blend 37%, and growth 25%. Thus, the U.S. equity component leans toward small-cap value.

International Component. The international stocks have the following sizes: large cap 32%, mid-cap 44%, and small cap 24%. The style is: value 39%, neutral or blend 31%, and growth 30%. This gives the the U.S. equity component a value tilt. The international component favors mid-cap value.

Morningstar X-ray reports the geographic coverage of the international component as: U.S. & Canada 11.85%, Europe 41.69%, Japan 11.72%, Latin America 4.55%, Asia & Australia 26.07%, and other 4.12%

Submit a Comment

Your email address will not be published. Required fields are marked *