Vanguard Funds in 401k

my highest return fund for the last 2-3 quarters is also the one with the highest expense.. I can't justify dropping it for a lower expense when it outperforms everything else.

The reason Vanguard is so well thought of is that they tend to have very low expense ratios. That's what it costs to meet fund overhead.

Whether they happened to earn a good return or not is pretty irrelevant since nobody has figured out yet how to do that consistently.

Note also that this applies mainly to index funds. An index fund invest in an index (like the S&P 500) blindly - it does not attempt to pick individual stocks. It just buys the index. It turns out that this coupled with the low costs generally does better than actively managed funds.

So your only question once you go the index route is to determine your risk tolerance. Personally, unless you are already familiar with asset allocation and risk tolerance I think just buying a target retirement fund is the way to go.

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my highest return fund for the last 2-3 quarters is also the one with the highest expense.. I can't justify dropping it for a lower expense when it outperforms everything else.

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Absolute or Alpha?

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I am early in my career, and I feel I can be a little more risky but not sure to what extent and how long.

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I'm also very early in my career, so I'll share what I did in my 401k.

50% - 2045 retirement date fund
15% - S&P 500 index
15% - US Small cap fund
20% - EAFE all cap fund

This allows a certain degree of guidance and rebalancing in my portfolio, as well as a added layer of agressiveness. I plan on rebalancing annually.

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pretty sure absolute though

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absolute is pretty irrelevant for judging fund performance, with all due respect.

The only reason I can see using absolute is if that is your only available option to access the asset class.

15% international
20% balanced Index
23% large growth
10% small cap
10% Mid cap
10% target Retirement (pick your date)
7% REIT
5% Europe

Overweight growth slightly, diverse allocation accross all sizes, sectors, geographies

UNDERWEIGHT Europe

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I'm also very early in my career, so I'll share what I did in my 401k. 50% - 2045 retirement date fund 15% - S&P 500 index 15% - US Small cap fund 20% - EAFE all cap fund This allows a certain degree of guidance and rebalancing in my portfolio, as well as a added layer of agressiveness. I plan on rebalancing annually

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Since you shared, I'll share for opinion sake.

But first, for the OP, that selection of Vanguard funds seems a little weird. Their biggest funds seem to be MIA.

Anywho, my Roth includes:

Vanguard Total Stock Market ETF (VTI)
Vanguard MSCI EAFE ETF (VEA)
Vanguard MSCI Emerging Markets (VWO)
Vanguard MSCI FTSE All World ex US Small Cap ETF (VSS)
Vanguard Total Bond Market ETF (BND)

I split up the international stuff so I could have some rebalancing ability. Plus, word and my research showed that the Total International ETF didn't really cover Small cap like the VTI does for the US.

From what I see with Vanguard though, their Target Retirement Funds just use the simple 3 holding portfolio with Total US, Total International, and Total US Bond Market.

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15% international
20% balanced Index
23% large growth
10% small cap
10% Mid cap
10% target Retirement (pick your date)
7% REIT
5% Europe

Overweight growth slightly, diverse allocation accross all sizes, sectors, geographies

UNDERWEIGHT Europe

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You have a lot more flexibility in your 401k than I have in mine.

If you roll in my Roth IRA with my 401k holdings it begins to look more like your allocation.

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Not for sharing, for aggression, but way back when I was a high equity allocator which was easy to choose in the late 80's-90's. I was semi-joking although that is recognizing you are informed, young, and aggressive. Nothing right nor wrong and my crystal ball seems to be semi-permanently hazed over these days.

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Part of it is that I am young and aggressive, the other part is that I want nothing to do with fixed income. I hold a ~5-10% of my total retirement assets in short duration bonds and high yield floaters, but I'm terified of interest rate risk right now. I would rather keep it in my savings account yielding .65% than be out 5-10 years at these rates.