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Invest in VSMAX for exposure to small cap
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The funds that I've chosen to capture the whole of the US stock markets
are heavily weighted towards large cap. My portfolio is meant to be
long-term retirement investments. Accordingly, I can increase the amount
of holdings in small cap. I'll be doing this through VSMAX.
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@DavidCain
DavidCain committed Dec 27, 2021
1 parent 630170c commit abec12a
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Showing 4 changed files with 54 additions and 23 deletions.
9 changes: 5 additions & 4 deletions data/classified.csv
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Original file line number Diff line number Diff line change
@@ -1,8 +1,9 @@
ticker_name,asset_class,name
VTSAX,USStocks,"Vanguard Total Stock Market Index Fund Admiral Shares"
VFIAX,USStocks,"Vanguard 500 Index Fund Admiral Shares"
FSKAX,USStocks,"Fidelity Total Market Index Fund"
FZROX,USStocks,"Fidelity ZERO Total Market Index Fund"
VTSAX,USTotal,"Vanguard Total Stock Market Index Fund Admiral Shares"
VFIAX,USTotal,"Vanguard 500 Index Fund Admiral Shares"
FSKAX,USTotal,"Fidelity Total Market Index Fund"
FZROX,USTotal,"Fidelity ZERO Total Market Index Fund"
VSMAX,USSmall,"Vanguard Small-Cap Index Fund Admiral Shares"
FZILX,IntlStocks,"Fidelity ZERO International Index Fund"
VTIAX,IntlStocks,"Vanguard Total International Stock Index Fund Admiral Shares"
VBTLX,USBonds,"Vanguard Total Bond Market Index Fund Admiral Shares"
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40 changes: 34 additions & 6 deletions src/allocation.rs
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Expand Up @@ -52,6 +52,27 @@ pub fn bond_allocation(birthday: NaiveDate, from_years: u8) -> Decimal {
/// - 10% to REIT
///
/// [core-four]: https://www.bogleheads.org/wiki/Lazy_portfolios#Core_four_portfolios
///
/// I add a simple modification, which is to not exceed 50% of my US stocks in large cap.
/// Some of my largest funds are heavily weighted towards large cap:
/// - VTSAX (~72% large cap):
/// - 41% Giant Cap
/// - 31% Large Cap
/// - 19% Mid Cap
/// - 6% Small Cap
/// - 2% Micro Cap
/// - VFIAX (~84% large cap)
/// - 50% Giant Cap
/// - 34% Largo Cap
/// - 16% Mid Cap
/// - FZILX (~84% large cap)
/// - 49% Giant Cap
/// - 36% Largo Cap
/// - 15% Mid Cap
/// For simplicity, just say that any US Total Market fund is 75% large cap.
/// Accordingly, for a 50/50 split of small+mid vs. large+giant,
/// I want $1 in VSMAX for every $2 in VTSAX.
///
pub fn core_four(ratio_bonds: Decimal) -> Vec<AssetAllocation> {
let one: Decimal = 1.into();

Expand All @@ -63,8 +84,9 @@ pub fn core_four(ratio_bonds: Decimal) -> Vec<AssetAllocation> {
vec![
// Allocate ratio of bonds
AssetAllocation::new(AssetClass::USBonds, ratio_bonds),
// Split remaining funds between US, International, and REIT (50%, 40%, and 10%)
AssetAllocation::new(AssetClass::USStocks, Decimal::new(50, 2) * ratio_stocks),
// Split remaining funds between US Total, US Small/Mid, International, and REIT
AssetAllocation::new(AssetClass::USTotal, Decimal::new(33, 2) * ratio_stocks),
AssetAllocation::new(AssetClass::USSmall, Decimal::new(17, 2) * ratio_stocks),
AssetAllocation::new(AssetClass::IntlStocks, Decimal::new(40, 2) * ratio_stocks),
AssetAllocation::new(AssetClass::REIT, Decimal::new(10, 2) * ratio_stocks),
]
Expand Down Expand Up @@ -112,30 +134,36 @@ mod tests {
core_four(0.into()),
vec![
AssetAllocation::new(AssetClass::USBonds, 0.into()),
AssetAllocation::new(AssetClass::USStocks, Decimal::new(50, 2)),
AssetAllocation::new(AssetClass::USTotal, Decimal::new(33, 2)),
AssetAllocation::new(AssetClass::USSmall, Decimal::new(17, 2)),
AssetAllocation::new(AssetClass::IntlStocks, Decimal::new(40, 2)),
AssetAllocation::new(AssetClass::REIT, Decimal::new(10, 2)),
]
);
}

#[test]
fn test_core_four() {
fn test_core_four_young() {
assert_eq!(
core_four(Decimal::new(20, 2)),
vec![
AssetAllocation::new(AssetClass::USBonds, Decimal::new(20, 2)),
AssetAllocation::new(AssetClass::USStocks, Decimal::new(40, 2)),
AssetAllocation::new(AssetClass::USTotal, Decimal::new(264, 3)),
AssetAllocation::new(AssetClass::USSmall, Decimal::new(136, 3)),
AssetAllocation::new(AssetClass::IntlStocks, Decimal::new(32, 2)),
AssetAllocation::new(AssetClass::REIT, Decimal::new(8, 2)),
]
);
}

#[test]
fn test_core_four_middle_aged() {
assert_eq!(
core_four(Decimal::new(60, 2)),
vec![
AssetAllocation::new(AssetClass::USBonds, Decimal::new(60, 2)),
AssetAllocation::new(AssetClass::USStocks, Decimal::new(20, 2)),
AssetAllocation::new(AssetClass::USTotal, Decimal::new(132, 3)),
AssetAllocation::new(AssetClass::USSmall, Decimal::new(68, 3)),
AssetAllocation::new(AssetClass::IntlStocks, Decimal::new(16, 2)),
AssetAllocation::new(AssetClass::REIT, Decimal::new(4, 2)),
]
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16 changes: 9 additions & 7 deletions src/assets.rs
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Original file line number Diff line number Diff line change
Expand Up @@ -112,7 +112,8 @@ impl fmt::Display for Asset {
#[derive(Debug, Clone, PartialEq, Eq, Hash, Serialize, Deserialize)]
pub enum AssetClass {
USBonds,
USStocks,
USTotal,
USSmall,
IntlBonds,
IntlStocks,
REIT,
Expand All @@ -124,7 +125,8 @@ impl fmt::Display for AssetClass {
fn fmt(&self, f: &mut fmt::Formatter) -> fmt::Result {
let name = match self {
AssetClass::USBonds => "US bonds",
AssetClass::USStocks => "US stocks",
AssetClass::USTotal => "US total market",
AssetClass::USSmall => "US small + mid cap",
AssetClass::IntlBonds => "International bonds",
AssetClass::IntlStocks => "International stocks",
AssetClass::REIT => "REIT",
Expand Down Expand Up @@ -199,16 +201,16 @@ mod tests {

#[test]
fn test_serializing_from_csv() {
let data = "ticker_name,asset_class\nVTSAX,USStocks\nVFIAX,USStocks";
let data = "ticker_name,asset_class\nVTSAX,USTotal\nVFIAX,USTotal";
let rdr = csv::Reader::from_reader(data.as_bytes());
let ac = AssetClassifications::from_reader(rdr).unwrap();
assert_eq!(
ac.classify("VTSAX").unwrap().to_owned(),
AssetClass::USStocks
AssetClass::USTotal
);
assert_eq!(
ac.classify("VFIAX").unwrap().to_owned(),
AssetClass::USStocks
AssetClass::USTotal
);
assert_eq!(
ac.classify("ABCDE"),
Expand All @@ -224,7 +226,7 @@ mod tests {
let data = "\
ticker_name,asset_class
AAAAA,USBonds
BBBBB,USStocks
BBBBB,USTotal
CCCCC,IntlBonds
DDDDD,IntlStocks
EEEEE,REIT
Expand All @@ -245,7 +247,7 @@ GGGGG,Cash";
String::from("Private Company"),
None,
5196.into(),
AssetClass::USStocks,
AssetClass::USTotal,
Some(Decimal::from(400)),
Some(Decimal::new(1299, 2)),
None,
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12 changes: 6 additions & 6 deletions src/rebalance.rs
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Original file line number Diff line number Diff line change
Expand Up @@ -331,7 +331,7 @@ mod tests {
#[test]
#[should_panic(expected = "Asset types must match")]
fn test_asset_types_must_match() {
let mut stocks = AssetAllocation::new(AssetClass::USStocks, 1.into());
let mut stocks = AssetAllocation::new(AssetClass::USTotal, 1.into());

stocks.add_asset(Asset::new(
String::from("Vanguard Total Intl Bd Idx Admiral"),
Expand All @@ -346,14 +346,14 @@ mod tests {

#[test]
fn test_current_value_is_summed_assets() {
let mut stocks = AssetAllocation::new(AssetClass::USStocks, 1.into());
let mut stocks = AssetAllocation::new(AssetClass::USTotal, 1.into());
assert_eq!(stocks.current_value(), 0.into());

stocks.add_asset(Asset::new(
String::from("Vanguard Total Stock Market Index Fund Admiral Shares"),
Some(String::from("VTSAX")),
8675.into(),
AssetClass::USStocks,
AssetClass::USTotal,
None,
None,
None,
Expand All @@ -365,7 +365,7 @@ mod tests {
String::from("Fidelity ZERO Total Market Index Fund"),
Some(String::from("FZROX")),
10000.into(),
AssetClass::USStocks,
AssetClass::USTotal,
None,
None,
None,
Expand Down Expand Up @@ -403,7 +403,7 @@ mod tests {
#[should_panic(expected = "Cannot rebalance unless total is 100%")]
fn test_allocations_do_not_sum() {
let does_not_sum = vec![
AssetAllocation::new(AssetClass::USStocks, Decimal::new(3, 1)),
AssetAllocation::new(AssetClass::USTotal, Decimal::new(3, 1)),
AssetAllocation::new(AssetClass::USBonds, Decimal::new(3, 1)),
];
let portfolio = Portfolio::new(does_not_sum);
Expand All @@ -413,7 +413,7 @@ mod tests {

#[test]
fn test_should_sort_by_current_allocation_value() {
let mut stocks = AssetAllocation::new(AssetClass::USStocks, Decimal::new(50, 2));
let mut stocks = AssetAllocation::new(AssetClass::USTotal, Decimal::new(50, 2));
let mut bonds = AssetAllocation::new(AssetClass::USBonds, Decimal::new(50, 2));

// We keep $10 in bonds, but plan to contribute nearly $1 million in stocks
Expand Down

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