Vanguard - Four Fund Portfolio

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209south
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Re: Vanguard - Four Fund Portfolio

Post by 209south »

chatbotte, extending your logic, I'm curious whether you have a market weight to international bonds?
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Re: Vanguard - Four Fund Portfolio

Post by chatbotte »

No, I do not, due to the total absence of currency hedged international bond index funds/ETFs in my country.
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Re: Vanguard - Four Fund Portfolio

Post by 209south »

Understood - I'm US-based but a dual citizen of the US and Canada and I do think the asset allocation targets and choices vary in fascinating ways depending on one's 'home market'. This is obviously a US-centric site, but I'm always curious what those in other countries think of the advisability of (say) large US$ bond holdings, or a position in bullion, or 'how much emerging markets should you own if you live in an emerging market?' I'm basically 50-50 in my equity and REIT holdings, I do hold a decent position in gold bullion, but wrt my fixed income position I'm heavily weighted to US credits as a hedge against local currency costs.
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Re: Vanguard - Four Fund Portfolio

Post by chatbotte »

DFA have an intriguing piece discussing country weights on Fama/French Forum. (Disclaimer: I do not purport to understand it. I guess that is why I find it intriguing, much like general relativity and the double-slit experiment.) :D

http://www.dimensional.com/famafrench/q ... cheme.aspx
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Good thread!
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Re: Vanguard - Total Markets Four Fund Portfolio

Post by chatbotte »

watchnerd wrote:
209south wrote: - Regarding pricing / valuation, while I am sympathetic to the argument that 'current yields are the best indicator of future returns', I am also a staunch EMH follower and, in this instance, have decided I'm not smart enough to time the markets and over-weight the USA because of current yields
Do you think EMH applies when the ECB and BOJ are buying trillions of dollars worth of euro and yen Japanese debt via their massive QE programs?
No idea. However, Fama says the Fed is not a big market player in terms of the dollar amount of its purchases on the open market. I am not sure about the ECB or the BOJ but I would presume the same applies to them also.

In any case, your reasoning can be bypassed by saying that rational investors are aware of the fact that the ECB and/or BOJ are buying trillions of dollars worth of debt and dump the bonds the ECB and/or BOJ are purchasing in order to flee to other assets, such as US bonds.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Would have loved a poll to see how many Bogleheads invest in the Vanguard Four Fund Portfolio.
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Re: Vanguard - Four Fund Portfolio

Post by ps56k »

as per the orig posting - the 4 funds -

* Total Stock Market (U.S.) Index
* Total International Stock Market Index
* Total Bond (U.S.) Market Index
* Total International Bond Market Index

The toss-up question in 3 pages of this thread is the - Intl Bond Index - is it worth it ? VTIBX -

I put some money into it, and then sat back.... reading...
Now, with everything that's going on in the EU - July 2015 - I'm wonder where I should add cash to offset my equity assets.
Do I add more to the Intl Bond Index (or just burn it in the yard),
or skip that - and add more to my Total Bond - VBMFX -
or add to my Ally CD ladder....

Is there really a need, real or perceived, to actually have the 4th bond component, just like with the International version of Total Stock ?
If you had $5k, $10k, $25k cash to add to your portfolio,
- would you add to your asset allocation still as a 4 fund portfolio, or drop back to 3 funds + an orphan...
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

ps56k wrote:as per the orig posting - the 4 funds -

* Total Stock Market (U.S.) Index
* Total International Stock Market Index
* Total Bond (U.S.) Market Index
* Total International Bond Market Index

The toss-up question in 3 pages of this thread is the - Intl Bond Index - is it worth it ? VTIBX -

I put some money into it, and then sat back.... reading...
Now, with everything that's going on in the EU - July 2015 - I'm wonder where I should add cash to offset my equity assets.
Do I add more to the Intl Bond Index (or just burn it in the yard),
or skip that - and add more to my Total Bond - VBMFX -
or add to my Ally CD ladder....

Is there really a need, real or perceived, to actually have the 4th bond component, just like with the International version of Total Stock ?
If you had $5k, $10k, $25k cash to add to your portfolio,
- would you add to your asset allocation still as a 4 fund portfolio, or drop back to 3 funds + an orphan...
Hi ps56k,

I replied to your other post regarding international bonds just now. Vanguard is really recommending this portfolio. To answer your question, if I made a strategy decision to include international bonds, I would rebalance (with new or existing money) as needed.

In the short term and present, how has international bonds been responding to the debt dilemma in Greece?

Best.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads,

This thread has been excellent in terms of the responses posted regarding the Vanguard Four Fund Portfolio.

I hope to continue to grow the thread with additional perspective and thoughts.

Best.
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Re: Vanguard - Four Fund Portfolio

Post by trueblueky »

In an interview in today's Money magazine, Bogel says, "Everybody's talking about how you have to have international, but I don't know why."

US has more innovation, better legal structure, better shareholder protections, he says.

"If you want to hold non-US stocks, go to 20%."
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

trueblueky wrote:In an interview in today's Money magazine, Bogel says, "Everybody's talking about how you have to have international, but I don't know why."

US has more innovation, better legal structure, better shareholder protections, he says.

"If you want to hold non-US stocks, go to 20%."
Hi trueblueky,

Would you happen to have a link to the Jack Bogle interview with Money magazine?

Best.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads,

Should REITs be considered for the Vanguard Four Fund Portfolio?
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads,

This has been an excellent thread and one that I would like to keep going much like the Three Fund Portfolio and the Core Four threads.

If anyone has any research, thoughts, or updates to the Vanguard Four Fund Portfolio, please consider posting here to the thread for everyone to review.

Best.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads,

I read the latest Financial Satatements for the Total International Bond Index fund as apart of the Vanguard Four Fund Portfolio. I did not realize that the fund includes U.S. companies that have issued bonds in foreign countries.

Warren Buffett's Bershire Harhaway and Apple are two companies that are noted.

Best.
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Re: Vanguard - Four Fund Portfolio

Post by Dandy »

I like the idea of diversification of the fixed income side from "just" Total Bond fund. I would add TIPS, CDs rather than International bonds. VG seem to want International bond to be at or near global proportions. That is way to much for my taste I see it a maybe a tilt percentage e.g. 5 or 10% at most. For me in retirement zero at least for now.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Dandy wrote:I like the idea of diversification of the fixed income side from "just" Total Bond fund. I would add TIPS, CDs rather than International bonds. VG seem to want International bond to be at or near global proportions. That is way to much for my taste I see it a maybe a tilt percentage e.g. 5 or 10% at most. For me in retirement zero at least for now.
Hi Dandy,

One question I have is as an investor gets closer to retirement, or is in retirement, the assumption is the bonds allocation is higher. With the higher bond allocation, 30% to international bonds as Vanguard recommends, may be increasing risks. Is this a valid assumption?

Best.
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Re: Vanguard - Four Fund Portfolio

Post by Dandy »

One question I have is as an investor gets closer to retirement, or is in retirement, the assumption is the bonds allocation is higher. With the higher bond allocation, 30% to international bonds as Vanguard recommends, may be increasing risks. Is this a valid assumption?
Abuss
I'm not sure how to assess the risk of International bonds. That is part of the reason I am not going down that route. The other is that in retirement with close to 58% of my total allocation in fixed income - I just don't see the need. I'd rather go the better known and "safer" route of CDs and TIPS.

To go from 0 to 30% is quite a big change. That type of action has made me pass on VG's TD and Life Strategy Funds. The closer dated the TD fund and the more conservative the Life Strategy fund the greater the change since their fixed income allocation is greater. I use the Balanced Index and Wellesley (despite it being "active") and some other fixed income to get my overall allocation where I want it. Unfortunately, a bit more complicated than I really desire.

Maybe if I was in the accumulation stage I'd give more thought to International bonds.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Vanguard experts should have a better understanding of the risks. They included in the all in one funds.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Do any Bogleheads have any good articles to share regarding the four fund portfolio?
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads,

Related to another thread, has investing changed over the years to be more global based?

In prior years an international bond fund typically included ex-U.S. companies. U.S. Bond fund included U.S. companies.

Vanguard Total Bond Index includes international companies issuing bonds in the U.S.

Vanguard Total International Bond Index includes U.S. companies issuing bonds overseas. I recently noted Apple and Berkshire Hathaway as immediately coming to mind.

Thoughts?
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Re: Vanguard - Four Fund Portfolio

Post by fidelio »

my roth is at fido, which is the only place i would consider foreign bonds. fido has 4 or 5 such offerings, but the lowest fees are almost 1%, no index funds. i therefore have passed on having any foreign bond funds. it's a remote possibility that i could pick some up after the bond situation has progressed, the fed has gotten its act together, etc., but we could all be pushing up daisies by then.
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Re: Vanguard - Four Fund Portfolio

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fidelio wrote:my roth is at fido, which is the only place i would consider foreign bonds. fido has 4 or 5 such offerings, but the lowest fees are almost 1%, no index funds. i therefore have passed on having any foreign bond funds. it's a remote possibility that i could pick some up after the bond situation has progressed, the fed has gotten its act together, etc., but we could all be pushing up daisies by then.
1% in fees is high.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Any updates to the Vanguard Four Fund Portfolio? I will search for recent news of Vanguard's website.
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Re: Vanguard - Four Fund Portfolio

Post by TXAGBH »

I'm not familiar with how international bonds are graded/rated. From a risk perspective, are there any ratings that can be used to provide and "apples to apples" comparison between US and Int'l bonds?
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

TXAGBH wrote:I'm not familiar with how international bonds are graded/rated. From a risk perspective, are there any ratings that can be used to provide and "apples to apples" comparison between US and Int'l bonds?
Hi TXAGBH,

That is an excellent question and one I am unsure of the answer as I too am learning about this asset class.

Perhaps another Boglehead will be able to provide a response.

Best.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Great threads on the forum presently regarding the Vanguard Four Fund Portfolio and the addition by Vanguard experts of International Bonds.
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Re: Vanguard - Four Fund Portfolio

Post by chatbotte »

abuss368 wrote:
TXAGBH wrote:I'm not familiar with how international bonds are graded/rated. From a risk perspective, are there any ratings that can be used to provide and "apples to apples" comparison between US and Int'l bonds?
Hi TXAGBH,

That is an excellent question and one I am unsure of the answer as I too am learning about this asset class.

Perhaps another Boglehead will be able to provide a response.

Best.
You can use credit ratings by Standard and Poor's, among others.

See https://en.wikipedia.org/wiki/Standard_ ... it_ratings
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Bogleheads -

Predictions for the coming year related to the Vanguard Four Fund Portfolio? Will Vanguard investment experts be changing any allocations?

Presently Vanguard recommends a stock allocation that is 60% Total Stock Index and 40% Total International Stock Index. The bond allocation recommendation is 70% Total Bond Index and 30% Total International Bond Index.
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Re: Vanguard - Four Fund Portfolio

Post by sambb »

i agree with four funds over 3 fund portfolio, and i think that the overall vanguard weigthings are fine
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

What is the probability that at some point in the future, Vanguard recommends a U.S. and International stock allocation that is 50%/50%? This would be more aligned with world weight.

Is may certainly be the easiest in terms of tracking and rebalancing.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

sambb wrote: Sat Dec 09, 2017 8:41 pm i agree with four funds over 3 fund portfolio, and i think that the overall vanguard weigthings are fine
Thanks.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

Will 2018 be the year Vanguard recommends a 50% of equity to U.S. and a 50% of equity to International?
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Re: Vanguard - Four Fund Portfolio

Post by Padlin »

The Lifecycles are 65/35 +/-, seems like a pretty big jump up to 50/50. I like they way they are now.
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Re: Vanguard - Four Fund Portfolio

Post by sambb »

same, i dont see vanguard changing, but i am glad that they reject bogle's view of international.
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Re: Vanguard - Four Fund Portfolio

Post by abuss368 »

I am curious for any updates from Bogleheads in terms of who uses Vanguard's recommended Four Fund Portfolio (i.e. Total Stock, Total International Stock,Total Bond, Total International Bond). Has anyone moved to this portfolio over time or plan too?
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Re: Vanguard - Four Fund Portfolio

Post by EvanRude »

I aspire to a simple Four Fund Portfolio. At age 59 my AA today is 55% equities (65% domestic, 35% international), 40% bonds (70% domestic, 30% international), and 5% money markets.

I say aspire because instead of only Total Stock Market for domestic equities I use a mixture of 500 Index, Mid Cap Index, and Small Cap Value Index in addition to 4 large cap individual stocks paying nice dividends, but with large capital gains that I don't want to sell now, and a relatively small play account with micro-cap stocks to get to TSM's overall percentage of large/mid/small domestic equity.

On the bond side Total Bond Market and Total International Bond Market are in tax-deferred along with some Investment-Grade Intermediate-Term. For the taxable account there is an Intermediate Term Muni Bond fund to meet the overall bond allocation outside of tax-deferred.

The account has baggage from the past with tax implications and admittedly some sentimentality in the individual stock holdings. The asset mixture is much more simplified than, say, 5-7 years ago. It is a work in progress but the Four Fund Portfolio is the aim.
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