S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

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BHawks87
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S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by BHawks87 »

In my 401(k) and my wife's HSA we have S&P 500 funds as the best US stock choices. We hold VTSAX in our Roth and Traditional IRA's. These S&P 500 funds make up roughly 30% to 35% of our US stocks. Would it be better to add a little small cap value or some other extended market type fund in addition to VTSAX to even out the large cap exposure? Or is it not really worth the time and effort and just stick with VTSAX?
Triple digit golfer
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Re: S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by Triple digit golfer »

What's your goal, to match the market or have a tilt?

If the former, keep doing what you're doing.
tomsense76
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Re: S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by tomsense76 »

In my 401k, I have access to an institutional version of VSMAX and so use that. This can approximate total stock market. Also have legacy VFIAX in taxable so bought some VEXAX to round it out (though have stopped trying to keep this balanced). Honestly the S&P 500 isn't that different from total stock market in performance. So if it were a hassle to add some small cap to balance it out, one wouldn't miss much by skipping it. Maybe one of those options would work for you?
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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ruralavalon
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Re: S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by ruralavalon »

BHawks87 wrote: Thu Jun 24, 2021 7:09 pm In my 401(k) and my wife's HSA we have S&P 500 funds as the best US stock choices. We hold VTSAX in our Roth and Traditional IRA's. These S&P 500 funds make up roughly 30% to 35% of our US stocks. Would it be better to add a little small cap value or some other extended market type fund in addition to VTSAX to even out the large cap exposure? Or is it not really worth the time and effort and just stick with VTSAX?
In my opinion in a plan which lacks a total stock market index fund a S&P 500 index fund is good enough by itself for investing in U.S. stocks. In the 29 years since the creation of the first total stock market index fund the two types of funds have had almost identical performance. Portfolio Visualizer, 1993-2021. Sometimes one fund is a little ahead, sometimes the other. I used the oldest share classes to get the longest period for comparison.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Visitor76
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Re: S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by Visitor76 »

BHawks87 wrote: Thu Jun 24, 2021 7:09 pm In my 401(k) and my wife's HSA we have S&P 500 funds as the best US stock choices. We hold VTSAX in our Roth and Traditional IRA's. These S&P 500 funds make up roughly 30% to 35% of our US stocks. Would it be better to add a little small cap value or some other extended market type fund in addition to VTSAX to even out the large cap exposure? Or is it not really worth the time and effort and just stick with VTSAX?
My current employer's 401a plan doesn't offer any total market funds, just an S&P 500 index fund. To mirror a total market fund such as VTSAX I've created a portfolio allocation with a blend of large cap growth and value, mid cap growth and value, and small cap growth and value funds. Over the years my allocation has out performed VTSAX at times.
Wealth is not about having a lot of money; it's about having a lot of options.
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Re: S&P 500 in 401(k) - Balance out with something other than VTSAX in IRA?

Post by Outer Marker »

BHawks87 wrote: Thu Jun 24, 2021 7:09 pm Would it be better to add a little small cap value or some other extended market type fund in addition to VTSAX to even out the large cap exposure? Or is it not really worth the time and effort and just stick with VTSAX?
Total Market is fine. In fact, the difference between TSM and SP500 is so small you need a magnifying glass to see it on the historic trend lines. SCV is a bet against the largest and most successful companies in America. Having once held a SCV tilt (for a long time) I would not recommend it.
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