Market Index

[Benderz]

This question is only for Mutual Fund Investing only. What Indices do you track and compare to your portfolio? Do you track the aggregate or do you break your portfolio into groups and compare to their applicable index?

[disneysteve]

This question is only for Mutual Fund Investing only. What Indices do you track and compare to your portfolio? Do you track the aggregate or do you break your portfolio into groups and compare to their applicable index?

It depends on the fund. Each fund typically compares itself to a particular index. So an S&P 500 Index fund will, obviously, compare to the S&P 500. My total bond fund compares itself to a bond index. My healthcare fund compares itself to a healthcare index. My real estate fund compares itself to a real estate index.

[Benderz]

It depends on the fund. Each fund typically compares itself to a particular index. So an S&P 500 Index fund will, obviously, compare to the S&P 500. My total bond fund compares itself to a bond index. My healthcare fund compares itself to a healthcare index. My real estate fund compares itself to a real estate index.

Yes understood to evaluate specific funds. But I also like to compare my portfolio to the market and to test portfolios to gauge how I'm doing. You can compare the aggregate portfolio return to the S&P 500, Wilshire 5000, Russela 2000. I also compare myself to the mornstar.com and money.com portfolios. Looking at the trailing 2, 3, 5, 10 year returns.

[disneysteve]

Yes understood to evaluate specific funds. But I also like to compare my portfolio to the market and to test portfolios to gauge how I'm doing. You can compare the aggregate portfolio return to the S&P 500, Wilshire 5000, Russela 2000. I also compare myself to the mornstar.com and money.com portfolios. Looking at the trailing 2, 3, 5, 10 year returns.

I don't think there is a single source to compare my entire portfolio to. Unless there is something with a very similar allocation, which is highly doubtful, I can't imagine it would be of any value to me.

[kv968]

I don't think there is a single source to compare my entire portfolio to. Unless there is something with a very similar allocation, which is highly doubtful, I can't imagine it would be of any value to me.

Although it may not be completely accurate, I compare my portfolio to a target date fund (take your pick...Vanguard, T Rowe Price, etc...) that would be time appropriate for me.

Granted it may not have the EXACT allocation that I have nor want, but it is a quick "one stop shop" where you can see what is attainable with just one easy investment that is "properly" diversified. Unfortunately it seems as of late I should be more in target date funds as my personal allocation has been lacking a few points the past couple of years

[disneysteve]

Although it may not be completely accurate, I compare my portfolio to a target date fund (take your pick...Vanguard, T Rowe Price, etc...) that would be time appropriate for me.

That's an interesting point. Could you do better, or just as good, by dumping everything into one fund?

Realistically, that would never work since we have money in so many different accounts (401k, 403b, traditional IRA, ROTH IRA, rollover IRA, taxable accounts, etc.). And I never really sit down and figure out the overall performance of our portfolio. I only look at each individual component and make sure it is performing well for what it is.

[kv968]

That's an interesting point. Could you do better, or just as good, by dumping everything into one fund?

Realistically, that would never work since we have money in so many different accounts (401k, 403b, traditional IRA, ROTH IRA, rollover IRA, taxable accounts, etc.). And I never really sit down and figure out the overall performance of our portfolio. I only look at each individual component and make sure it is performing well for what it is.

Again, it's not really an exact measurement, but it works good enough for me as a quick "back of the envelope" look at how things are going overall. But checking your funds against the individual indices they track definitely helps in determining how they're performing as well.

If you have each individual account (401k, ROTH, etc...) balanced as it's own portfolio then you could still use the target date method on each account. If however you treat all the accounts as a whole (i.e. 90% bonds in ROTH, 100% equity in 401k, etc...) in order to reach your total allocation then yeah, it's gonna be a little tougher comparing them unless you figure our your entire portfolio return.

And unfortunately for me, I would have been a little better off the past couple of years with just the "one fund" approach. Although that's not taking into consideration risk-adjusted returns but that's a topic for another day.

[disneysteve]

If you have each individual account (401k, ROTH, etc...) balanced as it's own portfolio then you could still use the target date method on each account. If however you treat all the accounts as a whole (i.e. 90% bonds in ROTH, 100% equity in 401k, etc...) in order to reach your total allocation then yeah, it's gonna be a little tougher comparing them unless you figure our your entire portfolio return.

Yep. I do it the 2nd way, treating it all as part of the whole, including both my accounts, my wife's accounts, and our joint accounts. I count it all as one big pot and the allocation is global across all of it.

[Like2Plan]

I haven't found a good way to back test our entire portfolio, either. (I did find a pretty neat website that does backtesting, though: https://www.portfoliovisualizer.com/...nalysisResults )

So, I am kind of in the same situation as Disney Steve. I track our entire portfolio on a boglehead type spread sheet (His/Hers and Ours) which I manually update. But, a couple of our 401K target funds don't have a commercially available tracking symbol.

So, I also do a back of the envelope look to compare the target funds we are invested in at year end. I remember one year thinking about doing a rollover for DH's 401k because the Vanguard target fund outperformed it. But, as usual I didn't do anything and the next year DH's 401K target fund won.

I have worked up the courage to start a 3 fund lazy portfolio out of DH's 401k's from his last 2 jobs. But, I am not sure how to evaluate them. It used to be 100% S&P500-- last year I added mid and small stocks (which I converted to TSM at the end of the year). This year I am adding international and a few more bonds to the mix. My 401K has most of the bonds. (And, it is incredible to see how fast DH's 401k has leap frogged ahead of mine in the latest stock market ).

[kv968]

Yep. I do it the 2nd way, treating it all as part of the whole, including both my accounts, my wife's accounts, and our joint accounts. I count it all as one big pot and the allocation is global across all of it.

Then I'd just take the average return of all the accounts combined and compare that to a Target Date Fund that would be appropriate for you. That should give you a decent ballpark figure of how they're doing. Or at least what you "could" be doing.