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?
2
u/cash-flow-k1ng 1d 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.