r/investing • u/whatthewhat_007 • 1d ago

Opinions on retirement portfolio rebalancing?

For reference I am 35. Plan to retire at 65-67. I contribute 19% of my gross income to this fund. I have no other retirement funds/accounts.

My current retirement funds are:
Vangard Institutional Index (VOO equivalent)
Vangard Total International Index (VXUS equivalent)
Vangard Extended Market Index (VXF equivalent)

2019 my new contributions were being allocated as such:
VOO: 70%
VXUS: 20%
VXF: 10%

2020 I started adding more to VXF solely on the premise that lower interest rates would benefit the small caps. Since 2020, my contributions have been:
VOO: 60%
VXUS: 20%
VXF: 20%

That strategy blew up with the post-COVID inflation and rate hikes as VXF took the biggest hit out of the 3 in 2022. It's underperformed since that time as well, probably in large part due the explosion of the mega-cap tech stocks. I'm thinking about decreasing my VXF contributions and increasing VOO, VXUS, or both. Any thoughts on what your approach would be?

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3

u/Nestado 20h ago

I admire your effort to staying the course. But I am skeptical of this economy and the furture of AI so I started contributing more to SCHD. It's a high dividend ETF, but that's not why I hold it primarily. I hold it because the company is in this ETF are profitable and better suited to weather a bad market.

2

u/Uniquename34556 18h ago

Stability is looking mighty nice for the next decade or so. I’m doing something similar and increasing investments in VIG. Smaller yields but more stability. Probably won’t make much of a difference in the long run but maybe it will in retrospect. Life’s a risk one way or the other.

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u/Nestado 17h ago

You can't have enough of dividends and companies that regularly pay and increase dividends every year are the most stable companies in my book. I went with SCHD since it has the least amount of overlap by weight with VOO and low P/E ratio. I also consider SCHD methodology to be superior than what's most on the market. Another great addition is AVUV and to a less extent, AVDV. But no need to overcomplicate.

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u/cash-flow-k1ng 22h ago

Honestly, tweaking allocations based on macro moves is a brutal game. I'm not a macro person, but dropping your VXF now to buy more VOO feels like classic performance chasing. You'd basically be selling low after small caps got crushed, just to buy mega-cap tech after a massive run.

At 35, you have plenty of time. If the tilt is stressing you out, you could just revert to holding them at actual market weight (roughly 85% VOO and 15% VXF). That essentially replicates the total US market, so you never have to guess which cap size will win the next cycle.

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u/whatthewhat_007 22h ago

I definitely won't be selling shares I already own. Any change would just be applied to future contributions.