fyi-Managed Payout Funds

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jiclemens
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fyi-Managed Payout Funds

Post by jiclemens » Mon Apr 21, 2008 8:33 am

New York Times Retirement special section today mentioned that the funds would be publically open today.
-John

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stratton
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Post by stratton » Mon Apr 21, 2008 8:41 am

Vanguard is apparently putting the money into a MMF for the first two weeks. It's a ploy to torture us diehards by prolonging the amount of time before we can unwrap the investment "chocolate" to see what's inside. :)

Paul

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Post by CyberBob » Mon Apr 21, 2008 10:24 am

Here is Vanguard's official announcement of the funds.

But even if they are in a subscription period until May 4th, shouldn't there be a prospectus available?!?

Bob
Last edited by CyberBob on Mon Apr 21, 2008 10:27 am, edited 1 time in total.

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Post by Stevewc » Mon Apr 21, 2008 10:26 am

Hello Group,
I called Vanguard about the new fund. The thing I learned that was most important to me was "It will not be tax managed at all". I didn't really think it would be but that kind of puts me on the side lines. The managers will be making a lot of moves and it will be killer for taxable money. Most of my funds are taxable so not a good game for me. Oh well, it will be interesting to watch.
Later,
Steve

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Prospectus:

Post by Barry Barnitz » Mon Apr 21, 2008 11:04 am

Hi cyberbob:

Here is the Prospectus.

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Post by stratton » Mon Apr 21, 2008 11:39 am

CyberBob wrote:Here is Vanguard's official announcement of the funds.

But even if they are in a subscription period until May 4th, shouldn't there be a prospectus available?!?
Sure, but the "best" prospectus that had the most information on the funds contents was the earliest preliminary one that had that chart showing "0..10% commodiities" etc. I haven't looked at the current one yet, but it's probably suitably vague.

Paul

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The official prospectus is at the site with other info

Post by jiclemens » Mon Apr 21, 2008 12:09 pm

I hope this thread will be a place for folks to offer thoughts and questions. As a retiree myself now most of our assets are in tax advantaged accounts. Hopefully record keeping would not be that difficult but I need a little time to review the prospectus now. I'm sure I'll have more questions later.

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Post by chaz » Mon Apr 21, 2008 12:23 pm

Why such a high ER (0.57)?
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Post by dumbmoney » Mon Apr 21, 2008 12:29 pm

Maybe I missed it, but I couldn't find the initial asset allocation in the prospectus. They did include the expense ratio, though, and to know that you have to know the asset allocation because it's a fund of funds.

The part about investing in a Vanguard hedge fund (if one is created) was interesting. Hey, Vanguard...you still don't have an international small-cap index fund and you're thinking about setting up a hedge fund? Get your priorities straight!

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Post by White Coat Investor » Mon Apr 21, 2008 12:35 pm

What is the problem with it being not tax managed? As I understand it the goal of these funds is to pay out a whole lot of income every year. You think Wellesley or TBM is tax-managed? The whole goal is to pay out taxable distributions. Am I missing something? If you want tax-efficient growth you probably don't want these funds (yet.)
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Post by Stevewc » Mon Apr 21, 2008 12:51 pm

Yes Doc.
I'm very interested in the new fund but it will be maybe 3 years before I need the income. I spoke with a rep @ vanguard and they said in my tax bracket it would probably be eating me up until I needed the withdrawal and maybe got in a lower bracket.

Do you think it would possibly weigh out (in the long run) better to jump in early (the beginning) at what will probably be a lower NAV and suffer the tax situation for a few years? Keep in mind I probably would refuse the payout until then.
Steve

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Post by White Coat Investor » Mon Apr 21, 2008 12:57 pm

Now that I think about it, I suppose it would be nice if a good chunk of the income qualified for the lower dividend/LT capital gains rate, so I suppose some tax management would be helpful.

If you didn't need the income, I wouldn't use the fund though, even to buy in at a "lower NAV." Although the NAV may be lower now, it is possible that you can buy just as many shares later if your money grew faster in another fund for the next 3 years. I don't see any benefit to getting in early.
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Post by dbr » Mon Apr 21, 2008 12:59 pm

If tax management is the issue, why would one want a distribution that is 100% taxable in preference to liquidating a fraction of the position with tax only applicable to the gain realized?

When these funds "distribute" income, what kind of income will this be -- qualified/non-qualified dividends, short/long capital gains, return of capital invested?

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Post by vanb » Mon Apr 21, 2008 1:03 pm

I am very interested in these funds. Will they work like a regular mutual fund? I assume each payout will reduce your number of shares. Will you be able to buy new shares at any time and thus increase your monthly payout? I assume you will be able to sell out if you want to. Any thoughts?

Bill

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Post by dumbmoney » Mon Apr 21, 2008 1:12 pm

EmergDoc wrote:What is the problem with it being not tax managed? As I understand it the goal of these funds is to pay out a whole lot of income every year. You think Wellesley or TBM is tax-managed? The whole goal is to pay out taxable distributions. Am I missing something? If you want tax-efficient growth you probably don't want these funds (yet.)
Remember you are not only paying taxes on your income; you are also paying taxes on any capital gains generated by the funds in excess of accumulated capital losses.

All in one funds do have one potential tax advantage - they can rebalance using cash flows. But if the fund isn't tax managed, then this potential benefit may be lost.
Last edited by dumbmoney on Mon Apr 21, 2008 1:16 pm, edited 1 time in total.

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Post by Stevewc » Mon Apr 21, 2008 1:15 pm

I don't know a lot about the fund at this point but the rep. did say it was designed more for tax advantaged accounts that were moving into the withdrawal stage. That makes me think it will be at the regular income tax rate.
Steve

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Post by mas » Mon Apr 21, 2008 1:55 pm

vanb wrote:I assume each payout will reduce your number of shares.
I think it would reduce the fund's NAV, just like distributions from other funds. Though some of them could be a return of capital.
vanb wrote:Will you be able to buy new shares at any time and thus increase your monthly payout? I assume you will be able to sell out if you want to. Any thoughts?
I think they are just like Vanguard's other funds that you can buy and sell at any time. Of course you'll have to buy/sell at the current NAV.

From the Vanguard article:
Traditional annuity products generally charge investors considerable fees or penalties for account principal withdrawals. Vanguard Managed Payout Funds offer investors easy access to their assets at any time.

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Post by pawpaw » Mon Apr 21, 2008 2:05 pm

Would anyone have any idea how the Managed Payout Distribution Focus Fund (VPDFX) would compare with The Target Income Fund ?

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Post by stratton » Mon Apr 21, 2008 3:40 pm

pawpaw wrote:Would anyone have any idea how the Managed Payout Distribution Focus Fund (VPDFX) would compare with The Target Income Fund ?
We don't know. We may not know until we go through a full year to get an idea of the tax cycle. A lot of the stuff in the managed payout funds is very tax inefficient such as the market neutral fund, bonds, TIPS, and commodities.

Paul

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Post by stratton » Mon Apr 21, 2008 3:42 pm

FYI, Vanguard has a full page ad today touting these funds on the back of the last section on personal finance of the WSJ.

Paul

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Post by Murray Boyd » Mon Apr 21, 2008 3:54 pm

I got a bad feeling about this. You just know people are going to buy these thinking they're safer than they really are.

These seem like a lawsuit waiting to happen.

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Post by Wagnerjb » Mon Apr 21, 2008 5:32 pm

Murray Boyd wrote:I got a bad feeling about this. You just know people are going to buy these thinking they're safer than they really are.
We are sure to get people in the funds who don't understand them well enough. I can foresee a bunch of questions on the 7% payout "distribution focus" fund. Unless the equity markets are strong, we will see investors saying "hey, why is my NAV dropping?. I thought I was just getting dividends and interest from this fund"?

Best wishes.
Andy

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Post by jiclemens » Mon Apr 21, 2008 6:23 pm

Wagnerjb wrote:
Murray Boyd wrote:I got a bad feeling about this. You just know people are going to buy these thinking they're safer than they really are.
We are sure to get people in the funds who don't understand them well enough. I can foresee a bunch of questions on the 7% payout "distribution focus" fund. Unless the equity markets are strong, we will see investors saying "hey, why is my NAV dropping?. I thought I was just getting dividends and interest from this fund"?

Best wishes.
Perhaps, but what attracts me is the calculation is based on a 3-year average NAV taking a lot of the potential volatility out. Calculate a 3-year moving average of Wellesley using the annual closing NAV and the fund looks darn good. Limiting the investment to tax-advantaged accounts seems to make sense and we would need to know at least a target asset allocation to know how to manage our taxable accounts. I am pleased that Vanguard makes it clear that the payouts are expected to "fluctuate" as we are already quite accustomed to fluctuation and they offer an opportunity to minimize that fluctuation, perhaps better than I could do on my own. I would love to hear someone suggest a simple, elegant way to mimic this concept on my own.

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Managed payout funds

Post by pkcrafter » Mon Apr 21, 2008 7:18 pm

Murray Coleman and I have both written an article on the new funds. Here is a link to Murray's article and in it is a link to mine.

http://www.indexuniverse.com/sections/b ... egies.html

As I understand it, the actual portfolios will not be set until May 4.

The biggest difference between the MP funds and TR funds is the MP funds will strive for a consistent payout each month.

The funds use both total return strategies and income strategies. The growth focused fund is expected to increase in value significantly. The growth and distribution fund is expected to out pace inflation and the distribution focused fund will not attempt to keep pace with inflation.

Vanguard expects the ER to drop as assets rise.

I am pretty sure you can invest in these funds without withdrawing, but the funds really are intended for those in the distribution phase.

Paul
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Post by dumbmoney » Mon Apr 21, 2008 7:54 pm

FYI, that article makes a misleading statement about the expense ratio. If you read the prospectus, the real expense ratio is lower...it's inflated by the short sale "expenses" of the market neutral fund (which are not management fees).

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Re: Managed payout funds

Post by bilperk » Mon Apr 21, 2008 8:15 pm

pkcrafter wrote:Murray Coleman and I have both written an article on the new funds. Here is a link to Murray's article and in it is a link to mine.

http://www.indexuniverse.com/sections/b ... egies.html

As I understand it, the actual portfolios will not be set until May 4.

The biggest difference between the MP funds and TR funds is the MP funds will strive for a consistent payout each month.

The funds use both total return strategies and income strategies. The growth focused fund is expected to increase in value significantly. The growth and distribution fund is expected to out pace inflation and the distribution focused fund will not attempt to keep pace with inflation.

Vanguard expects the ER to drop as assets rise.

I am pretty sure you can invest in these funds without withdrawing, but the funds really are intended for those in the distribution phase.

Paul
Hi Paul,

As I remember the prospectus, you have to take the "distribution", but you can have it automatically reinvested. In a deferred account, I don't see why it wouldn't be a reasonable choice for those in pre-retirement as you would be getting more and more shares through the payouts which would lead to bigger payouts at retirement.

I have contended since these first were announced that they will probably allow many to hold a bigger equity % then they would be willing to on their own. Long term Vanguard investor believe that this company will do what it says it will.

best,

Bill
Bill

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Post by JMacDonald » Mon Apr 21, 2008 8:31 pm

Hi,
I think a Roth IRA would be a good place for these funds. However, after looking at prospectus, it appears that it will be investing in funds that I already own except for the Market Neutral Fund. I don't see any reason to own more of the same. So I guess I will pass on it. Best Wishes.

Joe
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Post by Sheepdog » Tue Apr 22, 2008 4:37 am

dumbmoney wrote:Maybe I missed it, but I couldn't find the initial asset allocation in the prospectus.
The prospectus does say this though. "The fund does not maintain a fixed asset allocation policy and the exact proportion of each asset class or investment may be changed to reflect shifts in advisors risk and return expectation. While the fund has flexibilty to invest substantially in a single asset class or investment, the Fund is generally expected to allocate its assets across multiple asset classes and investments."
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Post by tokyoleone » Tue Apr 22, 2008 6:42 am

dumbmoney wrote:
FYI, that article makes a misleading statement about the expense ratio.
Not to be picky, but the article also referred to 75 billion retiring baby-boomers - let's hope that was a typo!

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Post by AlanK » Tue Apr 22, 2008 8:24 am

My wife does not have a lot of interest in matters financial. Should I predecease her, I thought that annuities would be a good vehicle for her. We've discussed this as an option. Payout funds -- both those offered by Vanguard and those offered by Fidelity -- can give her another option. I am beginning to discuss this option with her.

I think few people who read this forum on a regular basis are likely to find much value in payout funds for themselves. Hands-on investors probably prefer to do it themselves. Where payout funds are attractive to me is in what they can do for people who have less interest in investing -- people like my wife.

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Post by stratton » Tue Apr 22, 2008 8:32 am

Here's the table from the first SEC filed prospectus:

Code: Select all

ASSET CLASS OR INVESTMENT                           VANGUARD FUND    ASSET ALLOCATION RANGE
                                                                          (MINIMUM-MAXIMUM)
-------------------------------------------------------------------------------------------

U.S. Stocks                         Total Stock Market Index Fund                 15%-35%
-------------------------------------------------------------------------------------------
Non-U.S. Stocks                   FTSE All-World ex-US Index Fund                 15%-35%
-------------------------------------------------------------------------------------------
Bonds                                Total Bond Market Index Fund                  0%-25%
-------------------------------------------------------------------------------------------
Cash                                        Market Liquidity Fund                  0%-20%
-------------------------------------------------------------------------------------------
Market Neutral Investments                    Market Neutral Fund                  0%-25%
-------------------------------------------------------------------------------------------
Commodity-Linked Investments                       Not applicable                  0%-10%
-------------------------------------------------------------------------------------------
Inflation-Linked Investments  Inflation-Protected Securities Fund                  0%-20%
-------------------------------------------------------------------------------------------
Real Estate Investments                           REIT Index Fund                  0%-10%
-------------------------------------------------------------------------------------------
I don't know how accurate this is for the released funds.

Paul

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Post by mas » Tue Apr 22, 2008 8:42 am

AlanK wrote:Where payout funds are attractive to me is in what they can do for people who have less interest in investing -- people like my wife.
Exactly, they are for the same (huge) niche as target retirement funds. Nevertheless, it will be interesting to watch what these funds do over time? Will they have relatively static allocations, or constant changes? Will they succeed in their goal(s), and how stable are their payouts?

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Payout Funds

Post by pkcrafter » Tue Apr 22, 2008 10:26 am

Bill wrote:
As I remember the prospectus, you have to take the "distribution", but you can have it automatically reinvested.


Yes, Bill, that is what I meant. You can choose to reinvest distributions just like any other fund.

dumbmoney wrote:
FYI, that article makes a misleading statement about the expense ratio. If you read the prospectus, the real expense ratio is lower...it's inflated by the short sale "expenses" of the market neutral fund (which are not management fees).
I don't think it's misleading. The ER reflects what you are paying for the fund. Since the market neutral fund is part of the fund strategy, it's cost is indirectly a management fee that is passed on to you.

Paul
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Re: Payout Funds

Post by dumbmoney » Tue Apr 22, 2008 11:43 am

pkcrafter wrote:dumbmoney wrote:
FYI, that article makes a misleading statement about the expense ratio. If you read the prospectus, the real expense ratio is lower...it's inflated by the short sale "expenses" of the market neutral fund (which are not management fees).
I don't think it's misleading. The ER reflects what you are paying for the fund. Since the market neutral fund is part of the fund strategy, it's cost is indirectly a management fee that is passed on to you.
The reported expense ratio for the market neutral fund is 2%, but only 0.5% is management fees. So this quirk of expense ratio reporting makes a big difference.

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Post by CyberBob » Tue Apr 22, 2008 12:03 pm

stratton wrote:Here's the table from the first SEC filed prospectus:

Code: Select all

ASSET CLASS OR INVESTMENT                           VANGUARD FUND    ASSET ALLOCATION RANGE
                                                                          (MINIMUM-MAXIMUM)
-------------------------------------------------------------------------------------------

U.S. Stocks                         Total Stock Market Index Fund                 15%-35%
-------------------------------------------------------------------------------------------
Non-U.S. Stocks                   FTSE All-World ex-US Index Fund                 15%-35%
-------------------------------------------------------------------------------------------
Bonds                                Total Bond Market Index Fund                  0%-25%
-------------------------------------------------------------------------------------------
Cash                                        Market Liquidity Fund                  0%-20%
-------------------------------------------------------------------------------------------
Market Neutral Investments                    Market Neutral Fund                  0%-25%
-------------------------------------------------------------------------------------------
Commodity-Linked Investments                       Not applicable                  0%-10%
-------------------------------------------------------------------------------------------
Inflation-Linked Investments  Inflation-Protected Securities Fund                  0%-20%
-------------------------------------------------------------------------------------------
Real Estate Investments                           REIT Index Fund                  0%-10%
-------------------------------------------------------------------------------------------
I don't know how accurate this is for the released funds.

Paul
This is exactly the type of chart I would want to see for these funds. Unfortunately, the newest prospectus (linked by Barry above) seems to have removed this chart altogether and instead substituted statements that seeming allow any asset allocation.

I would prefer the prudent mix shown above, which keeps you at least close to a certain overall allocation while still allowing leeway for the manager. Eliminating these constraints altogether seems to turn these into potentially very active market-timing funds :(

Bob

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Post by dual » Tue Apr 22, 2008 1:18 pm

AlanK wrote: Where payout funds are attractive to me is in what they can do for people who have less interest in investing -- people like my wife.
That is also my view. But we all know people for whom this applies, my wife and a close friend, for example. I think our discussion should focus on the pros and cons of these funds and also comparisons with alternatives such as Target Retirement funds.

Their purpose seems to be a fund that you can put on 'autopilot' while it does the right things to provide stability of income and maximize return. Unfortunately, the prospectus is vague about how they are going to do it. A quick read turns up this:
The advisor uses quantitative analysis and professional judgment in an attempt to combine complementary asset classes and investments across the risk/reward spectrum. The Fund does not maintain a fixed asset allocation policy, and the exact proportion of each asset class or investment may be changed to reflect shifts in the advisor's risk and return expectations.
Basically, "trust us."

But, what are the alternatives? We can either try to set up a method ourselves and find a way to implement it or try to find a trustworthy advisor who will remain trustworthy over a long period of time.

So this is definitely something worth studying but we need better information than the propectus seems to provide.

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Post by Stevewc » Tue Apr 22, 2008 1:36 pm

I spoke with a rep. again today at Vanguard. I was very adamant that there was a ton of baby boomers out here talking about and watching these new funds. I mentioned it was being discussed on this board as well as others. I told them that they better get it right :lol: . I went as far as to say that vanguard was a trusted company and being held to a higher standard than fido or any other fund company. I'm not sure if it did any good but I gave my spill anyway :) I feel better already :lol: .
Steve

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So, they are asset allocation funds

Post by donocash » Tue Apr 22, 2008 2:07 pm

At first glance, I think the fun comparison will be between these "payout" funds and VAAPX (Vanguard Asset Allocation Fund).

The main differences that I see on first glance:

1) VAAPX can go to a 100% allocation to stocks, bonds, or money markets. These payout funds can vary their allocation, but within prescribed brackets.

So, the question is, can the brackets limit the damage of market timing, or will they damage the return? How good will the timing be?

2) The asset allocation fund can only use US stocks, bonds, and money market funds. The payout funds add international stocks, TIPs, commodities, and market neutral (hedge-lite?) as options.

So, there has been a ton of discussion on these boards about the addition of international stocks, TIPs, and commodities to portfolios. Will these additions actually result in the payout funds outperforming VAAPX? Will any advantage of having these options be negated by poor timing in the tactical asset allocation? (Am I the only dinosaur that still uses the term tactical asset allocation?) If these additional investment options are great diversifiers, why aren't they available to VAAPX?

3) VAAPX is designed for long-term growth of capital and income. How different is that really from the growth version of the payout fund?

The comparison is imperfect - you can argue that any differences in the returns of the funds are due to differences in goals rather than the effectiveness of the asset allocation.

Still, I think it will be interesting to watch.

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Re: So, they are asset allocation funds

Post by mas » Tue Apr 22, 2008 3:06 pm

donocash wrote:3) VAAPX is designed for long-term growth of capital and income. How different is that really from the growth version of the payout fund?
Withdrawing from a portfolio without depleting it requires low volatility. I think these funds are being designed with that in mind and will maintain lower average equity allocation than VAAPX in order to achieve it.

All just speculation until the first quarterly report of holdings comes out (or maybe several years worth of reports).

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Fund Construction

Post by Jowali » Tue Apr 22, 2008 4:15 pm

I am intrigued by the makeup of the funds. Seemingly more complicated than lifestyle funds. Will this add anything to returns? If so, should the lifestyle funds use the asset allocation or something similar? Would it be possible to replicate this allocation using only vanguard funds? If not, what would be a good way to do this? I assume Vanguard thinks this is a better model or why else would they go thru the bother?
Jowali

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core fund

Post by supergrouper » Tue Apr 22, 2008 5:38 pm

Frankly I'm using the growth mp fund to get cheap access to commodities,market neutual fund and maybe even a cheap hedge fund,both in absolute terms(buy-in) and the er. I'm re-investing my distributions. I am using seven other funds for further diversification,or to over-weight certain classes.
s.t.treasury
value index
extended mkt index
small cap value
reit index
int'l value
emerging markets
All of this is in my Roth,which I treat as a separate portfolio from taxable.
I live off taxable and let my Roth ride. If the new fund doesn't perform to expectations I'll just go back to my pre mp lineup.
In the world of today I don't think you can be too diversified. Tony

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Introducing Vanguard Managed Payout Funds

Post by Mel Lindauer » Tue Apr 22, 2008 6:19 pm

Here's the latest from Vanguard on the Managed Payout Funds, including estimated monthly payments.

https://personal.vanguard.com/us/JSP/Fu ... ndsJSP.jsf

Best regards to all,

Mel

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Post by Waiting for Godot » Tue Apr 22, 2008 11:09 pm

How big is Vanguard's market for the managed payout funds?

It would seem they are targeting retirees with assets between 0-$4 million. After that, you could get a Vanguard Advisor to manage your money for less than the expense ratios that these funds charge.

From the Vanguard web site.
Assets Under Management (Minimum assets: $500,000) Annual Fee*
First $1,000,000 0.75%
Next $1,000,000 0.35%
Subsequent amounts 0.20%

After $4 million, your annual management fee would average to .375%, so when you add the average fund costs of .21% to that management fee, you get a .585% total annual expense ratio and an advisor to hold your hand through it all. With advisors out there who can design portfolios that would yield similar results while charging a lot less, I'm not sure I understand what the attraction of these funds are. Who else would use these funds but retirees? Also, is there something special in these funds that will allow them to outperform a reasonable diversified mix of asset classes? The 7% guaranteed pay out seems high. Am I missing something here?

It would seem that they plan to market these to boomers who have accumulated this money in tax deferred vehicles and want to set it on autopilot as a way to compete against annuities, managed pay out, and other target date type funds. In the 0-$4 million market, they have a huge population of investors to attract it would seem, but this seems to go against Vanguard's business model of catering to institutional clients. After all, you need to spend money to attract assets from a lot more people. I am curious to see how the results will turnout. Wonder if Vanguard is heading into a new strategic direction, or I'm just totally off base here.

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Post by dumbmoney » Wed Apr 23, 2008 7:58 am

Waiting for Godot wrote:Wonder if Vanguard is heading into a new strategic direction, or I'm just totally off base here.
What strategic direction? Vanguard already offers a bunch of all-in-one funds. So do other fund companies. Now they will have a couple more...no big deal.

pkcrafter
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Post by pkcrafter » Wed Apr 23, 2008 8:49 am

Jowali wrote:
Would it be possible to replicate this allocation using only vanguard funds? If not, what would be a good way to do this? I assume Vanguard thinks this is a better model or why else would they go thru the bother?


You will not be able to replicate the MP funds at Vanguard on your own. At this point, we are not even sure what they will include, but if you wanted to try to replicate with other funds, the cost would probably be too high.

The MP funds are modeled after university endowment strategies. Maybe Vanguard has been reading Swensen.

Godot wrote:
It would seem they are targeting retirees with assets between 0-$4 million. After that, you could get a Vanguard Advisor to manage your money for less than the expense ratios that these funds charge.
Probably not targeting a certain group. You could not get a Vanguard advisor who can model the MP funds. Non Vanguard advisors would have to use more expensive funds.

dumbmoney wrote:
What strategic direction? Vanguard already offers a bunch of all-in-one funds. So do other fund companies. Now they will have a couple more...no big deal.
These funds are a definite departure from Vanguard's usual conservative strategy and I hope they are not simply an attempt to keep up with the competition for the investor dollar.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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mas
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Post by mas » Wed Apr 23, 2008 9:32 am

pkcrafter wrote:I hope they are not simply an attempt to keep up with the competition for the investor dollar.
Of course they are. Why does Vanguard exist if not to offer competitive products and gather investment dollars. Doing so ultimately helps existing funds by diluting shared costs. I have "doubts" about whether these funds will perform as advertised, but they do not seem so outlandish. Often times us diehards hope for funds like international small value, that Vanguard seems totally uninterested in providing. Maybe they should do more funds outside of their "comfort zone".

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ken250
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Post by ken250 » Wed Apr 23, 2008 9:49 am

IMO the MP funds are long overdue, and considering the level of diversification they will do relatively well.

I really don't care if VG is releasing these funds due to market pressure, whatever gets them to do what's best for investors is fine with me. VG's fund selection is somewhat limited, the MP funds are a breath of fresh air.

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jiclemens
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Post by jiclemens » Wed Apr 23, 2008 10:06 am

pkcrafter wrote: These funds are a definite departure from Vanguard's usual conservative strategy and I hope they are not simply an attempt to keep up with the competition for the investor dollar.

Paul
A lot of academic work has been done on using various asset classes to properly diversify a porfolio and some, like commodities, are not readily available or understood by the general public. I don't consider this a "departure" from the usual conservative strategy. If anything it seems like an enhancement, and Bernstein might agree.

kenner
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Post by kenner » Wed Apr 23, 2008 2:57 pm

With the addition of commodities, this looks a little like a move toward DFA-style asset class options. Now, if Vanguard would give us small cap international, microcap, etc., we'd be all set with 100% Vanguard 100% of the time.

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