Big differences between Vanguard and Morningstar

So I decided to take a look at my asset allocation this morning to see what a few months' changes have done to it. I went to Vanguard and found these basic numbers:

• Value/Blend/Growth looks like 25.6/45.4/8.0 (with 21.0% in international)
• Small/Mid/Large looks like 14.6/18.8/45.5 (again, 21.0% international)

To doublecheck, I went to morningstar's instant x-ray and entered all my funds and amounts. The result was this:

• Value/Blend/Growth looks like 28.8/26.5/23.3 (with 21.4% in international)
• Small/Mid/Large looks like 7.8/22.6/48.2 (again, 21.4% international)

Now, in my understanding, the concepts of value and growth and small/mid large are pretty concrete-- they depend on fundamental characteristics of each stock. So why such dramatic differences between M* and Vanguard?

My inclination is to think that Vanguard classifies a fund as value/blend/growth and small/mid/large, and then assigns every dollar in that fund into that classification. So a small cap value fund will go into the portfolio analyzer as 100% SCV, even though it may contain some portion of mid cap stocks or growth stocks. M* probably breaks it down to the stock level. That would explain why they differ.

But this is still disturbing to me, primarily because I arranged my entire portoflio to tilt toward small and value. According to M*, I failed at both. There is barely a value tilt (28.8/23.3) and my tilt toward small is instead a tilt toward mid. This aggravates me because I am specifically invested in funds that lean that way, and SURELY they do not stray so far from their title as M* sugests. I could not possibly have lost nearly HALF of my small cap stocks as M* suggests. Surely my small cap funds aren't just half small cap. And surely a small cap value fund isn't 40% value, 40% blend, and 20% growth, which is what M* is suggesting.

I'm thinking that my belief in how Vanguard analyzes your portfolio is correct, and thus it's not totally accurate. But I think there has to be something wrong with M*'s instant x-ray as well. There's no way that my growth content, which Vanguard reports as 8%, could really be 23.3%. I don't see how that is possible with my portfolio containing several index funds that specifically emphasize value and not one fund emphasizing growth.

Has anyone else noticed this? If you have a vanguard account with your outside account info typed in (which is nice, btw), look at their portfolio analysis tool and compare it to M*'s instant x-ray. Tell me if yours looks as wonky as mine.

Net Worth Update-- September 4

Overall, the market was pretty flat this month. In late July I got hammered, and in August, despite the volatility, things were better. My market investments overall gained 0.23%. The bigger story for me (and my net worth) was debt reduction. I eliminated my auto loan this month . . . which led to a drop in my assets (lowest level since May) but a much bigger drop in my liabilities. My net worth is up 1.8% over my last report in August, and I'm back on track to meet my goal (though the market will need to help me a little more in the coming months). This is a new high for my bottom line after a dip last month, and I'm now up 24.2% since I started tracking in February. I think I still have a period of fast growth ahead of me, as new savings/investments will still be a decent chunk of my net worth. I won't post my goal graph this month, as I think it's getting a bit tedious . . . I've given you the pertinent information anyway.

As in previous updates, I checked in on my Net Investable Assets and Net Liquid Assets, both of which grew in relation to my net worth. NIA is now almost 51% of my net worth, and NLA is almost 8%. Both of those figures are new highs.

This month I have added a new figure to help track my progress: Earned Retirement Income (ERI). This concept was introduced to me by BrokNowRchLatr and he gives an explanation in this post. Essentially it measures what your current picture means in terms of retirement income. Instead of focusing on the dollar figure, I am tracking my ERI as a percentage of my goal. This month my ERI is 12.0%-- meaning I have enough saved to fund 12.0% of the retirement income that I feel I need. With my auto debt out of the picture, I expect my progress in ERI to speed up (it's only up from 9.8% in February).

I hope everyone has had a wonderful month and didn't worry too much about the markets. I apologize for the sporadic posting, but life gets in the way of blogging sometimes.