Asset Allocation Question

After taking Level I CFA, I am now catching up on all the things I’ve been neglecting for a while - such as the asset allocation of my 401k. I feel the choice I’ve made is pretty decent for a 27 year old - ~35% split among international funds, the rest is about 70% in the S&P500 index and the rest split between a small cap fund and DODBX. (this isn’t my only portfolio but it’s my main one) I am thinking if this could be tweaked a little bit. I have fund options in my 401k that cover Large Growth, Large Value, Large Blend (that’s the S&P index), Small Growth, Small Value, and Midcap. I would like to keep my international section at 35% but perhaps split up the domestic equity differently between the styles and cap-sized offered. I’ve not been able to find any good literature that would help me make this decision. Is there some conventional wisdom out there on what a 27 year old’s portfolio should have in terms of small/mid/large/growth/value? Thanks, -Ed

I hear 1/n diversification is a great strategy :wink: Oh, level III - damn you… I hate thee so much.

Unfortunately, there is no fast rule for that, at least not in my eyes. Everything depends on your return and risk objectives. What kind of return do you want? Can you sleep when market plunge 20%… This also depends on what you believe the phase of investment cycles are, some people believe it’s growth still (coz of commodity), some prefer value… personally, I would make the portfolio mild value bias (if you know how to measure it) because over the long term, growth and value tend to generate similar return but value is less volatile. On top of that, do you believe in active management? if so, then fund level selection is critical…if not, then vanguard index always do the trick. I have posted something earlier about active vs passive investment… some interesting read. Lastly and of course, there is no financial advice in anything I typed.

Have about 40% in the ishares or vanguard preferably the russell 1000, put the remaining in all cap funds that will opportunistically allocate throughout the market cap spectrum,