Halls of Shrewd'm / US Policy
No. of Recommendations: 0
Recently there has been some discussion here of equal weight index (QQQE and RSP) now being a better value than the SP500 index.
My problem is that much of my investments are in a workplace retirement plan, where I have choices of low cost index funds for SP500, total market index, and extended market index. But no equal weight index.
Is there a way to approximate an equal weight index by using some combination of total market index & extended market index? At what ratio?
Stopped Clock
No. of Recommendations: 5
In truth, the difference between SPY, RSP, and VXF (an extended market EFT) has been de minimus for the last twenty years or so. But over shorter (or simply different) periods they can vary more, in either direction.
https://stockcharts.com/freecharts/perf.php?SPY,RS...RSP's performance is basically indistinguishable from that of a S&P400 Mid-cap fund like IJH:
https://stockcharts.com/freecharts/perf.php?RSP,IJ...There are years-long periods when small/mid caps outperform, and vice versa. Combining SPY and VXF in some middling proportion would represent a hedge against that variance. You could also try to exploit the variance by trade them against each other, based on intermediate term momentum. Depends on your interest, and what your plan allows.
Baltassar
No. of Recommendations: 1
While not directly responsive to your question - have you tried asking your company plan administrator to work to offer a better set of choices? Might work, especially if you can find other employees of similar mind. (My first employer after grad school had a 401(k) with *no* index funds but two REITs :-()
No. of Recommendations: 0
Yes, I like the mid-cap trackers partly for this reason. They're still market-cap weighted, but being further down the curve, the overweighting towards the biggest components is not as huge as in the large-cap trackers.
And there's also a chance to benefit from selling any overvalued stocks that move into the large-cap bracket.
No. of Recommendations: 1
You can closely approximate equal weight with 30% S&P 500 and 70% mid-cap. Which unfortunately isn't an option you have. Might check with your benefit people. Most people don't need both total market and extended market.
No. of Recommendations: 8
You can closely approximate equal weight with 30% S&P 500 and 70% mid-cap.
Interestingly, even with only 30% in the S&P 500 you'd have 7.47% of your whole portfolio allocated to the 5 largest market-cap names in the S&P 500.
(versus 1% in an all-S&P-500-equal-weight portfolio)
Pretty remarkable market concentration these days.
Jim
