No. of Recommendations: 2
Here is a suggested allocation for the
portion of your portfolio where you desire
"know nothing full exposure" to the US market. By definition, "know nothing" includes making no judgement regarding cap weighted versus equal weighted. We take the easy way out and divide equally between the two.
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SP500 Cap Weighted 40%
Nasdaq Equal Weighted (QQQE) 20%
SP500 Equal Weighted (RSP) 10%
Fortune 500 Equal Weighted (DFVE) 10%
Extended Market Cap Weighted 20%
(This is the full market ex SP500)
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80% is large cap, equally divided between cap weighted and equal weighted. Currently cap weighted may not be favorable, but a person DCA-ing over multiple decades, the difference between the two may not be much.
The equal weighted portion is half assigned to QQQE so we can overweight the companies with fastest growing earnings. The other half is equally divided between RSP and DFVE Fortune 500 equal weighted. This adds variety because Fortune 500 list is ranked based on revenue whereas RSP is ranked based on market cap. Apparently Fortune 500 list has approximately 460 companies, 130 of which are not in RSP. DFVE has performed better than RSP per the fact sheet.
Last but not least, for good measure and since we desire full market exposure, the last 20% is allocated to the extended market (full market ex SP500). If you bought a full market cap weighted index fund, extended market is usually about 20% allocation. Even though it's cap weighted, it's not too concentrated because it comprises of almost 3000 companies (company 501 - 3500+)
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https://www.invesco.com/us/financial-products/etfs...https://doubleline.com/funds/fortune-500-equal-wei... 