Vanguard LifeStrategy Fund

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bogledesk
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Vanguard LifeStrategy Fund

Post by bogledesk »

I am moving some funds into a Vanguard taxable account and have a couple quick questions for the Bogleheads.

I like the asset allocation and fund choices in the "Vanguard LifeStrategy Moderate Growth Fund" (VSMGX), so it would be easiest to just dump everything into this fund and be done with it. However, I am concerned over time Vanguard will change the allocation between stocks versus bonds and the allocation between U.S. versus international.

So my question is this: Would it be better to buy the four individual funds separately that comprise VSMGX instead of buying VSMGX directly so I stay in full control of the allocation between stocks versus bonds and the allocation between U.S. versus international? Note that I will have other ways of rebalancing as I will be making regular contributions to this account for several years and I can also shift things around in other accounts to rebalance.

Thanks again for your help.
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CABob
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Re: Vanguard LifeStrategy Fund

Post by CABob »

bogledesk wrote: I like the asset allocation and fund choices in the "Vanguard LifeStrategy Moderate Growth Fund" (VSMGX), so it would be easiest to just dump everything into this fund and be done with it. However, I am concerned over time Vanguard will change the allocation between stocks versus bonds and the allocation between U.S. versus international.
Vanguard has made changes to their funds of funds in the past and it is possible that they will do so in the future. The changes have been relatively minor and infrequent so IMO this would not be a factor in selecting a fund.
You should be aware however that the bond fund portion of the fund is considered to be tax inefficient so it is generally not the best choice for a taxable account.


So my question is this: Would it be better to buy the four individual funds separately that comprise VSMGX instead of buying VSMGX directly so I stay in full control of the allocation between stocks versus bonds and the allocation between U.S. versus international? Note that I will have other ways of rebalancing as I will be making regular contributions to this account for several years and I can also shift things around in other accounts to rebalance.
Assuming that your account balance is high enough to buy Admiral share fund you will find that you have slightly lower expense ratios if you have the individual funds. Is that significant enough to be a decision factor? Maybe maybe not. Since you indicate that you have no problem doing the rebalancing and reallocation I think I would lean toward the individual funds. In the long run, however I doubt that either choice will make a large change in portfolio performance.
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saltycaper
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Re: Vanguard LifeStrategy Fund

Post by saltycaper »

I don't know if full control is "better", but I do know I would not use LS funds if full control was desired. Why invest in something you're concerned about if you can get a similar enough product (the individual funds) that you are not concerned about?
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Eric76
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Re: Vanguard LifeStrategy Fund

Post by Eric76 »

The boglehead move is to limit taxable bonds to retirement accounts. Because the life strategy funds all include a percentage of taxable bonds, they are not the best vehicle for a taxable account.
TBillT
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Re: Vanguard LifeStrategy Fund

Post by TBillT »

Good fund I am also considering.
There is a recent thread about Bill Sharpe's total market approach, and I believe this fund is the closest to that idea.
delamer
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Re: Vanguard LifeStrategy Fund

Post by delamer »

Eric76 wrote:The boglehead move is to limit taxable bonds to retirement accounts. Because the life strategy funds all include a percentage of taxable bonds, they are not the best vehicle for a taxable account.
This isn't wrong but it may not be quite right either. If you have retirement savings in both taxable and tax-advantaged accounts, then it makes sense to hold the bonds in the tax-advantaged account. But if you have a taxable account for another purpose, there is nothing wrong having a bond allocation if it meets your needs. OP didn't mention the purpose of this account.
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