Mutual Fund Portfolios Explained

In November of 2006, I started researching Mutual funds for a hypothetical Portfolio. I was frustrated by article after article praising this fund or that, listing the 'best' funds available, only to find they were not available through my brokerage, they were closed to new investors, they required $10,000 or more up front to purchase, etc. So I established the following criteria for my experiment. Each fund had to:
  • Be available through Etrade
  • Be open to new investors
  • Be a No-Load, No-Transaction Fee fund
  • Have an initial minimum investment amount of $2500 or less
  • Have subsequent minimum investment amount of $100 or less

When picking each fund I looked at a variety of factors. I wanted a portfolio that could work for a non-retirement account so tax efficiency was important. Rarely was there one fund in each category that was the best in every aspect so the selection was sometimes more art than science. Here are the factors I considered:

  • Turnover Ratio
  • Expenses
  • Performance
  • Style Drift

Then on May 1st of 2007, I 'hypothetically' invested $50,000 in the 20 funds I selected. I set up a portfolio at Morningstar with $2500 'invested' in each fund. Then I set up $50,000 in a portfolio of Vanguard funds to see which would perform better.

The funds I picked are mostly managed funds meaning managers pick and choose which companies they think will do well and invest in them. Most of the Vanguard funds are index funds, meaning the 'supervisor' of the fund invests in every company in the index the fund seeks to track.

I also invested in 20 ETFs which can be loosely described as index funds that trade like stocks. Later, I set up another portfolio of three index funds and invested 55% in US stocks, 15% in bonds and 30% in International stocks. This was close to the percentage breakdown of the 20 fund portfolios and I wanted to see if just picking three broad index funds was just as effective as attempting to keep track of 20 different funds. I 'invested' $50,000 in SPY an index fund that tracks the S&P 500 index. And finally, I set up a portfolio that will add one new fund each month until it has 20.

Below are the details about each fund. I am listing the category the fund covered when I picked it, the ticker symbol with a link to Morningstar's details about each fund, the name of the fund, my post explaining why I picked it, an indication of whether it is a managed fund 'M' or an Index fund 'I' and the order in which I picked the fund.

The WylieMoney 20 Mostly Managed Portfolio
The Lazy 20 Mostly Index Portfolio
  • Large Cap Growth - VIGRX Vanguard Growth Index I
  • Large Cap Blend - VLACX Vanguard Large Cap Index I
  • Large Cap Value - VIVAX Vanguard Value Index I
  • Mid Cap Growth - VMGIX Vanguard Mid-Cap Growth I
  • Mid Cap Blend - VIMSX Vanguard Mid-Cap Index I
  • Mid Cap Value - VMVIX Vanguard Mid-Cap Value I
  • Small Cap Growth - VISGX Vanguard Small Cap Growth I
  • Small Cap Blend - NAESX Vanguard Small Cap Index I
  • Small Cap Value - VISVX Vanguard Small Cap Value I
  • Global Equity - VHGEX Vanguard Global Equites M
  • Foreign Large Growth - VWIGX Vanguard International Grth M
  • Foreign Large Blend - VGTSX Vanguard Total Intl Stock Index I
  • Foreign Large Value - VTRIX Vanguard International Value M
  • Foreign Small Growth - VINEX Vanguard Intl Explorer M
  • Foreign Emerging - VEIEX Vanguard Emerging Mk Index I
  • Specialty Real Estate - VGSIX Vanguard REIT Index I
  • Bond Gov. Long - VUSTX Vanguard Long-Term U.S. Treasury M
  • Bond Inter. Term - VFICX Vanguard Interm-Term M
  • Bond Short Term - VBISX Vanguard Short-Term Bond Index I
  • Bond Inflation Prot - VIPSX Vanguard Inflation-Prot Secs M
ETF 20
  • Large Cap Growth - VUG Vanguard Growth ETF I
  • Large Cap Blend - VV Vanguard Large Cap I
  • Large Cap Value - VTV Vanguard Value ETF I
  • Mid Cap Growth - VOT Vanguard Mid-Cap Grth I
  • Mid Cap Blend - VO Vanguard Mid Cap ETF I
  • Mid Cap Value - VOE Vanguard Mid-Cap Value I
  • Small Cap Growth - VBK Vanguard Small Cap Grth I
  • Small Cap Blend - VB Vanguard Small Cap I
  • Small Cap Value - VBR Vanguard Small Cap Value I
  • Global Equity - IOO iShares S&P Global I
  • Foreign Large Growth - EFG iShares MSCI EAFE Grth I
  • Foreign Large Blend - EFA iShares MSCI EAFE Intl I
  • Foreign Large Value - EFV iShares MSCI EAFE Value I
  • Foreign Small Growth - DLS WisdomTree Intl I
  • Foreign Emerging - VWO Vanguard Emerging Markets I
  • Specialty Real Estate - VNQ Vanguard REIT Index I
  • Bond Gov. Long - TLT iShares Lehman 20+ Years I
  • Bond Inter. Term - BIV Vanguard Intermediate I
  • Bond Short Term - BSV Vanguard Short-Term I
  • Bond Inflation Prot - TIP iShares Lehman TIPS I
Really Lazy 3 Fund Portfolio
  • VTSMX Vanguard Total Stock 55%
  • VBMFX Vanguard Total Bond 15%
  • VGTSX Vanguard Total Intl 30%
S&P 500
  • SPY S&P 500 Index ETF
The WylieMoney Slowly Mostly Managed Portfolio

Portfolio Updates
11/06/09- Sorry I Am
10/09/09- Busy Child
09/25/09- Burning Down the House
09/18/09- Who Knew
09/11/09- Peach
08/14/09- Never Going Back Again
08/07/09- The Boys of Summer
07/31/09- All is Full of Love
07/24/09- Seven Days
07/17/09- Days Go By
07/10/09- Remember the Time?
05/15/09- It Ain't Over 'Til It's Over
05/08/09- Airbag
05/01/09- Two Years In
04/24/09- Don't Stop Believing
04/17/09- Invisible Sun
03/27/09- Loser
03/13/09- Hallelujah
02/27/09- Here Comes the Flood
02/13/09- Main Theme
02/06/09- That's Good
01/30/09- Lard
01/23/09- Southbound Pachyderm
01/16/09- I Won't Back Down
01/09/09- When You're Falling
01/02/09- Alright
12/26/08- We are the Champions
12/19/08- Wanderlust
12/12/08- Is This It
12/05/08- Alfie
11/28/08- Curtains
11/21/08- Help!
11/14/08- Nasty
11/07/08- Bob the Drummer
10/31/08- Big Time
10/24/08- History Repeats Itself
10/17/08- Should I Stay or Should I Go
10/10/08- It's The End Of The World As We Know It (And I Feel Fine)
10/03/08- The Show Must Go On
09/26/08- Down in the Hole
09/19/08- Think About it
09/12/08- Um, Is this Blog Dead?
09/05/08- Anybody There?
08/29/08- Where's Wylie?
08/22/08- No Post
08/15/08- Roll On
08/08/08- Shaft
08/01/08- Changes
07/25/08- Heavy Cloud No Rain
07/18/08- Something 2 Dance 2
07/11/08- Behind My Camel
07/04/08- Calling It Quits
06/27/08- Swan Dive
06/20/08- Escape From New York
06/13/08- Dancing With Myself
06/06/08- Bad
05/30/08- Comin Back
05/23/08- Driven to Tears
05/16/08- I'm On Fire
05/09/08- The Song Remains the Same
05/02/08- Road to Nowhere
04/25/08- Jump Around
04/18/08- Lovely Day
04/11/08- Contrarian
04/04/08- Up
03/28/08- ETFs on the Rise
03/21/08- Hope Springs Eternal
03/14/08- Long Term US Bonds Rule
03/07/08- Down
02/29/08- WylieMoney has a Good Friday
02/22/08- Another Positive Week But Still in the Red
02/15/08- Will ETFs Come Back
02/08/08- The Portfolio Shuffle
02/01/08- Back in Black!
01/26/08- Markets and My Appendix Blow Up
01/18/08- No update (I was hurting more than normal)
01/11/08- Everybody Hurts... Sometimes
01/04/08- Ouch!
12/28/07- WylieMoney Inches Ahead Down the Stretch
12/21/07- 0% is Better than a Loss

12/14/07- Capital Gains Bring Sadness
12/07/07- Gains All Around
11/30/07- Back in Black
11/23/07- Emerging Markets and Domestic Bonds
11/16/07- S&P takes Baby Step Forward
11/12/07- ETFs in the Red
11/02/07- My Roth IRA Takes a Tumble
10/26/07- S&P 500 is Crushed
10/19/07- Capital Gains and Painful Losses
10/12/07- My Accounts Join the Race
10/05/07- WylieMoney Up 7.51% Since May
09/28/07- WylieMoney Pulls Away
09/21/07- WylieMoney on Top!
09/14/07- WylieMoney ahead, ETFs remain in red
09/07/07- Being Lazy hurts
08/31/07- WylieMoney breaks tie
08/24/07- WylieMoney and Three Fund tie
08/17/07- S&P500 in First
08/10/07- WylieMoney the best loser
08/02/07-WylieMoney one of the few in the green
07/26/07- Lazy Portfolio Plummets
07/23/07- Three Fund Portfolio on top
07/12/07- Three Fund Index takes lead
07/02/07- Managed Funds outperform
06/06/07- WylieMoney hangs on
05/30/07- WylieMoney ahead, but not by much
05/08/07- WylieMoney jumps into lead


David Jones said...

So, after all of this, what is your recommendation?

Wyliemoney said...

Recommendation about what? I am performing an experiment, not giving advice.

It has been far too short a time period to even analyze the results of the experiment, which would/will still not be a recommendation.

David Jones said...

Every experiment has findings, even if those findings are inconclusive.

Obviously, you can't make a judgment with certainty. However, you should be able to draw conclusions from your findings about the costs / benefits of implementing each of the strategies you're observing.

Perhaps you don't have enough data to make a confident recommendation yet, but you should still be able to comment on the trends you're observing, and re-examine your hypothesis.

Wyliemoney said...


Well the short term performance numbers speak for themselves. With ETFs you would have lost money, but with all the portfolios, the value has not changed a whole heck of a lot over the summer.

If you are looking for findings and conclusions (which are not recommendations, even for the non-obtuse) then I reiterate, not enough time has passed.

A year from the original investment on May 1st 2006 will warrant some assessment. Also, if the market makes a serious move up or down, seeing how the different portfolios respond will be worth commenting on.

A trend I have observed is that the Mostly Managed portfolio holds up better when the market tanks and the index funds have done better when the markets rebound. I have theories that this is influenced by the cash holdings in the managed portfolios. It could also be an indication of current market behavior. A lot of the volatility in the market over the summer strikes me as related to fear and then relief over specific things that have nothing to do with the vast majority of companies that are losing and then regaining value. Could it be that when the markets are broadly panicking and then rallying, values are less efficiently priced, less tied to the fundamental values of individual companies? And would indexes perform better in these conditions than managed funds that theoretically attempt to focus on discovering value or growth opportunities in individual companies and then investing in it?

If this is true, the question would be, will the markets be in panic rally flux or stable, rewarding value periods more or less often?

These are some trends I have seen and my wild speculations, but my experiment was not designed to and will not answer these questions.

David Jones said...

What was your experiment designed for?

In other words, why should I or shouldn't I take the time to invest in your recommendations using your strategies instead of investing in a separate set of funds via different strategies?

Assume that my goal is to make maximize profits but with regard to the amount of time I need to devote to managing. Also assume I'll cash out no sooner than 5 years and no later than 30 in the future.

Wyliemoney said...

"In other words, why should I or shouldn't I take the time to invest in your recommendations using your strategies instead of investing in a separate set of funds via different strategies?"

I am about to publish a post about this. The short answer is, the WylieMoney 20 portfolio/strategy was designed to allow small $100 contributions to a portfolio of mutual funds for no fee. If you do not plan to add to your holdings in small amounts, this is not the best strategy. If you can afford 10 or 20 funds that have $10,000 initial investment amounts, this is also not the best group of funds you will find. There are better no-load fee based funds in many of these categories and paying the $20-$40 fee to buy them depending on your brokerage, is well worth it given how much better the funds are likely to perform. But paying $40 for each $100 subsequent contribution obviously makes no sense!

I hope this helps.

Anonymous said...

tHIS Blog Is Dead.


Wyliemoney said...


That shift key is a tricky one, eh?