I've been working on coming up with an AA for myself (I'm thinking probably 4 or 5 funds) and have been looking at some of the boglehead portfolios and lazy portfolios. One thing I noticed is that Vanguard Target Retirement funds have no REIT component. Does anyone know why?
I guess the same question could be asked about the Vanguard LifeStrategy funds.
Why do Vanguard Target Retirement funds have no REIT?
Re: Why do Vanguard Target Retirement funds have no REIT?
Total Stock Market holds about 2.5% in REIT and TR holds Total Stock Market.
LS funds hold exactly the same funds as TR funds in accumulation years (no TIPS). The only real difference is that LS funds hold a fixed AA and TR funds adjust AA on a glideslope to retirement.
LS funds hold exactly the same funds as TR funds in accumulation years (no TIPS). The only real difference is that LS funds hold a fixed AA and TR funds adjust AA on a glideslope to retirement.
Last edited by David Jay on Tue Jun 27, 2017 12:46 pm, edited 2 times in total.
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triceratop
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Re: Why do Vanguard Target Retirement funds have no REIT?
They do have REITs, at market weight proportions as they appear in the equity portions.GaryA505 wrote:I've been working on coming up with an AA for myself (I'm thinking probably 4 or 5 funds) and have been looking at some of the boglehead portfolios and lazy portfolios. One thing I noticed is that Vanguard Target Retirement funds have no REIT component. Does anyone know why?
I guess the same question could be asked about the Vanguard LifeStrategy funds.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
Re: Why do Vanguard Target Retirement funds have no REIT?
Yes, I forgot to mention that I knew that, but I've noticed that some of the lazy ports have an added 5% to 20% in REIT (Coffeehouse, Swensen Unconventional, Ferri Core-Four, etc).triceratop wrote:They do have REITs, at market weight proportions as they appear in the equity portions.
Re: Why do Vanguard Target Retirement funds have no REIT?
Just to be a little clearer:
Form Vanguard's white paper:
"Note that Vanguard does not maintain a separate allocation to real estate investment trusts (REITs) within the TDFs. However, we do include exposure to REITs as part of the U.S. and non-U.S. equity allocations at their market weight" See https://personal.vanguard.com/pdf/icrtdf.pdf at page 9. Of course, this would also apply in the Life Strategy Funds.
Also, it is my understanding that many SCV funds have a fair amount of REIT exposure. As an example, VIOV lists real estate at 4.7%. So if SCV will be one of your tilts, you may want to take a closer look at fund or ETF composition.
Form Vanguard's white paper:
"Note that Vanguard does not maintain a separate allocation to real estate investment trusts (REITs) within the TDFs. However, we do include exposure to REITs as part of the U.S. and non-U.S. equity allocations at their market weight" See https://personal.vanguard.com/pdf/icrtdf.pdf at page 9. Of course, this would also apply in the Life Strategy Funds.
Also, it is my understanding that many SCV funds have a fair amount of REIT exposure. As an example, VIOV lists real estate at 4.7%. So if SCV will be one of your tilts, you may want to take a closer look at fund or ETF composition.
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PFInterest
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Re: Why do Vanguard Target Retirement funds have no REIT?
I like how this was a google-able answer.Lastrun wrote:Just to be a little clearer:
Form Vanguard's white paper:
"Note that Vanguard does not maintain a separate allocation to real estate investment trusts (REITs) within the TDFs. However, we do include exposure to REITs as part of the U.S. and non-U.S. equity allocations at their market weight" See https://personal.vanguard.com/pdf/icrtdf.pdf at page 9. Of course, this would also apply in the Life Strategy Funds.
Also, it is my understanding that many SCV funds have a fair amount of REIT exposure. As an example, VIOV lists real estate at 4.7%. So if SCV will be one of your tilts, you may want to take a closer look at fund or ETF composition.
Re: Why do Vanguard Target Retirement funds have no REIT?
Vanguard TR funds don't have a lot of things as well as not REITs. There could be tilts to small and value and to emerging markets. There could be commodities. There could be gold and other precious metals. There could be pipeline MLPs. I don't think they are including much in TIPS but maybe end up with a little bit. They don't use a stable value fund. They don't annuitize.