Bob,bobmoore wrote:What is it people don't like about Vanguard's Managed Payout Growth and Distribution Fund (VPGDX).
What is it people don't like about Vanguard's Managed Payout Growth and Distribution Fund (VPGDX).
Vanguard Managed Payout Funds are not guaranteed to achieve their investment objectives and are subject to loss, and some of their distributions may be treated in part as a return of capital.
The dollar amount of a fund's monthly cash distribution could go up or down substantially from one year to the next and over time. It is also possible for a fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under its managed distribution policy. An investment in a fund could lose money over short, intermediate, or even long periods of time because each fund allocates its assets worldwide across different asset classes and investments with specific risk and return characteristics. Diversification does not necessarily ensure a profit or protect against a loss in a declining market. The funds are proportionately subject to the risks associated with their underlying funds, which may invest in stocks (including stocks issued by REITS), bonds, cash, inflation-linked investments, commodity-linked investments, long/short market neutral investments, and leveraged absolute return investments.
Managed Payout Funds may not be appropriate for all investors. For example, depending on the time horizon, retirement income needs, and tax bracket, an investment in a Managed Payout Fund might not be appropriate for younger investors not currently in retirement, in IRAs or other tax-advantaged accounts for those investors under 59½, or for participants in employer-sponsored plans. Investors who hold a Managed Payout Fund within a tax-advantaged retirement account should consult their tax advisors to discuss tax consequences that could result if payments are distributed from their core account prior to age 59½ or if they plan to use the Managed Payout Funds, in whole or in part, to meet their required minimum distribution (RMD) obligations. Distributions from the Managed Payout Funds are unlikely to precisely match an investor's IRA RMD obligations. In addition, use of the Managed Payout Funds may be restricted in employer-sponsored plans by the terms of the governing plan documents and/or at the discretion of the plan administrator. Review the information carefully with your financial advisor before deciding whether a Managed Payout Fund is right for you.
Before investing, consider the Managed Payout Funds' investment objectives, strategies, risks, fees, and expenses. Contact Vanguard for a prospectus containing this information. Read it carefully.
SSSS wrote:...Also it includes a 10% allocation to Vanguard's "Market Neutral" fund which is pretty dubious on its own. It's actively managed, has by far the highest expense ratio of any Vanguard fund...
There are two problems to solve in retirement: 1) How to allocate one's portfolio, and 2) How much to withdraw every month to meet expenses.bobmoore wrote:But what is it people don't like? I think the allocation and fees are good. And I wouldn't need to take the full distribution every year.
I assume you refer to Vanguard Managed Payout Distribution Focus Fund Investor Shares (VPDFX), 64.5% stocks.riskreward wrote:The actual stock % of the least aggessive payout fund shows at 64% but 10% is invested in a market neutral fund so realistically it has about 54% purely unhedged stock investment which mirrors the 2015 target retirement fund.
nisiprius wrote:I don't know why Market Neutral and commodities failed to work their risk-reduction magic, but in fact they did not.
Well, market collapses happen from time to time, and if a fund company offers a fund that is intended to provide reasonably stable retirement income, and it is investing in 64.50% stocks (Managed Payout Distribution Focus) when other funds with the same objective are at 35.56% stocks (Wellesley Income), 29.15% stocks (Target Retirement Income), and 24.57% stocks (LifeStrategy Income), it is fair to say that Managed Payout is very different and fair to ask whether it's riskier and whether buyers understand that.Alex Frakt wrote:Because that magic is based on backtesting over all conditions, as opposed to backtesting (or just thinking about what happens) during market collapses. Typically market collapses mean high volatility, low liquidity and depressed economies. Taken together that means the costs of hedging increases while commodity prices (with the occasional exception of gold) decrease. So your magic fails just when it's needed the most.nisiprius wrote:I don't know why Market Neutral and commodities failed to work their risk-reduction magic, but in fact they did not.
Users browsing this forum: 2cents2, assumer, Baidu [Spider], Goal-33xSpending, hondamts, investoman, Investor101, jay22, mhristic, mptfan, Pocket Cruiser, Rupert, SteveKL, sushicary, Tamales, terran, Traveller, trueblueky, turangaleela, winski58, Yahoo [Bot], yorkpond and 82 guests