Retirement Portfolio Asset Allocation Check-up

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So my $16,000 401k rollover check made it to Vanguard safely via good ole’ First Class mail. Now all our retirement investments are at Vanguard. Here is the breakdown:

Vanguard Target Retirement 2035 (VTTHX) – $14,748
Vanguard Target Retirement 2045 (VTTHX) – $23,516

According to the current information at, based on the weighting of each of the two funds of funds, our asset allocation is currently as follows:

67.6% – VTSMX, which tracks the MSCI? US Broad Market Index
15.2% – VBMFX, which tracks the Lehman Brothers Aggregate Bond Index
12.0% – VEURX, which tracks the Morgan Stanley Capital International Europe Index
5.1% – VPACX, which tracks the Morgan Stanley Capital International Pacific Index

Or more generally,

68% (Mainly) Large-Cap Domestic Stocks
17% International Stocks, and
15% Intermediate-Term Bonds.

I’m pretty satisfied with this, as my goal was to make my breakdown about 70/15/15, and I did pretty close to it with only two funds. I thought about more international exposure, but I think that many U.S.-based companies are already very ‘international’. My overall expense ratio is also at a near rock-bottom 0.21% as well.

What’s everyone else’s asset allocation (and age)? If you don’t know, you really should find out. It’s one of the main predictors for future returns and volatility.

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  1. Hello. I commented a while back, and I was also rolling over my old employers 401k to a Vanguard IRA. I’m 28, and my allocation is roughly-

    40% large cap,
    20% mid cap
    20% small cap
    20% International

    Right now I elected to put my rollover all into the Vanguard TR 2045, but I think in a few months I’ll be switching it to a few different funds to diversify a little more, I guess I kinda like a little more hands-on of an approach. Look forward to your updates..

  2. I play a slightly more aggressive strategy than you, it seems. I’m 35 and my allocation is as follows:

    24% US large cap
    40% US small cap
    5% real estate
    18% international
    13% emerging market

    Majority of my monies are in various Vanguard funds – you just can’t beat those expense ratios. I’ve also got a fair amount tied up in some Dodge & Cox International (DODFX) and some Bridgeway Ultra-Small Company (BRSIX) – slightly higher expenses, but certainly nothing I’d consider excessive – and they’ve done me very well for some time, so I can’t complain! I probably should be looking for a bond fund or two to round out my portfolio, but I just can’t seem to get all that excited about investing in ’em… 😉

  3. To the above poster:
    You have over 50% of your money invested in small cap stocks and emerging markets, 95% of your money in equities. I can’t imagine most 25 year olds feeling safe with this kind of asset allocation, much less a 35 year old. At the very least, I would look into reallocating some of your small cap equity money into a fixed income fund. Stocks and bonds have negative correlation, so it really helps out with diversification, which is what you desperately need right now. If we had another ’87 or ’01, you could easily lose 40-50% of your portfolio value. The older you get, the more you should put in bonds.


  4. If this fund sold in ETF form? I’m in Canada, we have Barcklay iUtint (version of american iShares), but I can buy any ETF for my pension plan, just looking for one like that.

  5. Your expense ratio isn’t really 0.21%. You should include that those funds are combinations of other funds that also have a particular expense ratio.
    In your case, if I remember correctly, the other funds have a management fee of roughly 0.2% also. So, really, your fees are about 0.4%.

    I’ve been burned badly in the past with that.

  6. Anon – I have to disagree. It is 0.21%, the weighted average of the underlying funds. Vanguard, unless some other companies, does NOT charge an additional layer of expenses on top of that of the underlying funds. But you are right to be wary of that, since some companies, such as Fidelity, do.

  7. LazyIndexer says

    Here’s my target allocation (inspired by Roger Gibson, Yale’s endowment, and DFA’s global funds):

    30% US Equities
    17.5% Intl Equities
    12.5% EM Equities
    20% REITs
    20% Commodities

    Within each equity asset class, I try to break it into:

    20% Large Cap Blend
    40% Large Cap Value
    20% Small Cap Blend

  8. LazyIndexer says

    Small Cap Blend should be 40%

  9. John Koontz says

    Is there a tool to show you the equity class percentages of specific funds? For instance, I know one of my 401k funds matches the Russell 3000. I also know the Russell 3000 is an index of the top 3000 companies (98$). However, I can’t find the percentages of Large, medium, small cap. Any ideas?

  10. John, are you looking for something like Morningstar’s Instant XRay tool? Just google “morningstar xray”. You can enter one or more funds and it gives a breakdown of small/med/large cap and value/core/growth style percentages.

    This is an excellent tool for checking for fund overlap in your portfolio.

  11. The breakdown on my retirement portfolio is a follows:

    Fidelity Freedom Fund: 58.3%
    International Fund: 22.6%
    Bond Fund: 18.9%

    The freedom fund is a fund of funds that consists of large, medium and small cap funds as well as a mix of international funds.

    To date it’s done very well, but I know it’s what happens in the long run. I will problable make adjustments in the upcoming years to accomodate for my age.

  12. I’m 35 years old. Here’s my breakdown

    35% US Large Cap (VV)

    12.5% US Mid Cap (VO)

    12.5% US Small Cap (VB)

    22.5% International (50/50 split b/w VEA and VWO)

    5% REIT (VNQ)

    7.5% Bonds (BND)

    5% Commodity (DJP)

  13. I’m just starting out and i’m not looking to start investing with a focus on fixed income and retirement but im not to sure. Can anyone help me out maybe give me some ideas 🙁

  14. i meant “i am starting looking to start investing” excuse me.

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