I've been researching how to structure my different funds, and almost everywhere I look I see people buying funds based on market cap. e.g. investing 70% in a large-cap ETF like Vanguard's $VV, 20% in madcaps like $VO, and 10% in small caps like $VB.

However, if people would instead invest 33/33/33, then the overall ROI is much higher as proven on the site portfoliovisualizer.com. The trick is simply rebalancing at the end of the year, or so it seems.

I feel like I'm the minority here (particularly among Bogleheads). Am I the crazy one? Or is everybody else?

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    What's the volatility of the two alternatives? Unless you have a really long investment horizon, you should often focus on risk-adjusted return, not just return.
    – user
    Commented Jun 19, 2016 at 19:24
  • 1
    Ever look at the "Slice and Dice" approach among Bogleheads at bogleheads.org/wiki/Slice_and_dice ?
    – JB King
    Commented Jun 19, 2016 at 23:46

1 Answer 1


As a general rule, large caps tend to be less volatile than small and mid caps. In other words, large caps tend to go up less than small/mid caps in a bull market and, conversely, large caps tend to go down less in bear market. This suggests that how one chooses to apportion their portfolio between large, mid, and small caps should depend on the investors time horizon. If you are investing for the long term, then a 33/33/33 apportionment should be more attractive than a large cap heavy portfolio. In fact, on a long term horizon, a larger weighting in the small and mid caps would be well worth considering. In the current market conditions, where shares appear to be fully valued but well supported by low interest rates, I personally would stick with a 33/33/33 apportionment for a long term investment horizon.

The attractions of equal weight investing extend beyond how one apportions between market caps to how one apportions within market caps. For example, the RSP (equal weight S&P500) has outperformed the SPY (market cap weighted S&P500) over 10 years, returning 90% compared with 66% - a significantly higher return. (Both of these statistics are excluding dividends receivable.)

  • One thing to watch out for - looking today, SPY has an expense ratio of 0.0945% while RSP is set at 0.2% That may add up in the long run.
    – jocull
    Commented May 29, 2023 at 14:03

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