In the 2023 edition of “A Random Walk Down Wall Street,” Burton Malkiel presents a sample portfolio recommendation:
A SPECIFIC INDEX-FUND PORTFOLIO FOR INVESTORS IN THEIR MID-FIFTIES
55% Stocks
27% U.S. Stocks
(Schwab Total Stock Market Index Fund (SWTSX) or Vanguard Total Stock Market Index Fund (VTSAX)
14% Developed International Markets
(Schwab International Index Fund (SWISX) or Vanguard Developed Market Index Fund (VTMGX)
14% Emerging International Markets
(Vanguard Emerging Markets Index Fund (VEMBX) or Fidelity Spartan Emerging Markets Index Fund (FPADX)[/i]
12.5% Real Estate Equities
Vanguard REIT Index Fund (VGSLX) or Fidelity Real Estate Index Fund (FSRNX)
27.5% Bonds and Bond Substitutes
7.5% U.S. Vanguard Long-term Corporate Bond Fund ETF (VCLT) or iShares Corporate Bond ETF (LQD)
7.5% Vanguard Emerging Markets Government Bond Fund (VGAVX)
12.5% Wisdom Tree Quality Dividend Fund (DGRW) or Vanguard Dividend Growth Fund (VDIGX)
5% Cash
(Money Market Fund)
He also writes:
-“A short-term bond fund may be substituted for one of the money-market funds listed.”
-“Although it doesn’t fit under the rubric of an index-fund portfolio, investors should consider putting part or all of the U.S. bond portfolio in Treasury inflation-protected securities. The U.S. Treasury I Savings Bonds were an excellent choice in 2022.
-“The dividend growth and corporate bond funds are also exceptions since they are not standard index funds.”
One of my questions about this portfolio is about why he is splitting US and International Stocks 50/50? The Total World Index has US Stocks at over 60%. So this would be underweighting the US. If anything, US Investors wish to overweight US Stocks. Why would he deliberately go in the other direction?
(Edit: I stand corrected. Someone points out that the other parts of the portfolio such as REITs and Dividend Stocks (as bonds) are US based.)
Thank you.
A SPECIFIC INDEX-FUND PORTFOLIO FOR INVESTORS IN THEIR MID-FIFTIES
55% Stocks
27% U.S. Stocks
(Schwab Total Stock Market Index Fund (SWTSX) or Vanguard Total Stock Market Index Fund (VTSAX)
14% Developed International Markets
(Schwab International Index Fund (SWISX) or Vanguard Developed Market Index Fund (VTMGX)
14% Emerging International Markets
(Vanguard Emerging Markets Index Fund (VEMBX) or Fidelity Spartan Emerging Markets Index Fund (FPADX)[/i]
12.5% Real Estate Equities
Vanguard REIT Index Fund (VGSLX) or Fidelity Real Estate Index Fund (FSRNX)
27.5% Bonds and Bond Substitutes
7.5% U.S. Vanguard Long-term Corporate Bond Fund ETF (VCLT) or iShares Corporate Bond ETF (LQD)
7.5% Vanguard Emerging Markets Government Bond Fund (VGAVX)
12.5% Wisdom Tree Quality Dividend Fund (DGRW) or Vanguard Dividend Growth Fund (VDIGX)
5% Cash
(Money Market Fund)
He also writes:
-“A short-term bond fund may be substituted for one of the money-market funds listed.”
-“Although it doesn’t fit under the rubric of an index-fund portfolio, investors should consider putting part or all of the U.S. bond portfolio in Treasury inflation-protected securities. The U.S. Treasury I Savings Bonds were an excellent choice in 2022.
-“The dividend growth and corporate bond funds are also exceptions since they are not standard index funds.”
One of my questions about this portfolio is about why he is splitting US and International Stocks 50/50? The Total World Index has US Stocks at over 60%. So this would be underweighting the US. If anything, US Investors wish to overweight US Stocks. Why would he deliberately go in the other direction?
(Edit: I stand corrected. Someone points out that the other parts of the portfolio such as REITs and Dividend Stocks (as bonds) are US based.)
Thank you.
Statistics: Posted by TrustTheMarket — Thu Oct 03, 2024 8:29 pm — Replies 6 — Views 252