Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

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simpleidiot
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Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by simpleidiot » Thu Nov 07, 2019 7:48 pm

Hello dear friends,
I have all the tax deferred accounts available to me (Roth IRA until I made too much $$$, Traditional IRA, SIMPLE IRA) in Vanguard Target Retirement 2055.

I love the stress-free convenience of the all-in-one fund, but I don't like the large amount of total international--36% of the fund currently.

I would prefer a 10 or 15% international component at the most. ****Does such a vanguard fund exist?**** Namely, a 90/10 stock/bond fund where the stock allocation is more like 90% US / 10% international instead of the current 54% / 36%?

The Target date funds have underperformed the VTSAX I have in my taxable account in the past 10 years--I am aware that may change in the next 10 years.

Feel free to chime in one why you think such a large international component is wiser.

thank you!

smalliebigs
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by smalliebigs » Thu Nov 07, 2019 7:53 pm

Why don't you just build your own? There's nothing inherently special about the TDFs other than the glide path, which you can do on your own

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Brianmcg321
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by Brianmcg321 » Thu Nov 07, 2019 7:54 pm

85% VTSAX
15% International
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

stan1
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by stan1 » Thu Nov 07, 2019 7:59 pm

I'll go out on a limb and predict Schwab's new robovisor platform, once available, will let you customize a portfolio allocation (such as a target retirement fund) and it will auto rebalance to maintain the asset allocation you define. I expect you will be able to choose Vanguard ETFs. Stand by a few months. You can look at M1 Finance to see what they are doing now, but you might prefer to work with a bigger brokerage house. We don't know what Vanguard's new robovisor platform will look like and how much flexibility it will have.

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arcticpineapplecorp.
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by arcticpineapplecorp. » Thu Nov 07, 2019 8:04 pm

international stocks are much cheaper than U.S.

Do you like paying more for your investments or less?

Paying less tends to lead to higher future returns. Paying more tends to lead to lower future returns.

Do you know more than the market does? About half the worlds' investments in equities are outside the U.S. (world market cap for equities currently is around 55% U.S. and 45% international) This has changed and will continue to change over time. So why do you think you know something everyone else doesn't?

If you work in the U.S., you actually want to hold internatinonal since you don't want your investment capital and human capital tied to just one economy (U.S.). Diversification is best.

You're dealing with recency bias (expecting the future poor returns of international relative to U.S. to continue). What we generally know is things change.

Probably the best argument I can make is this:

I can't fit the entire page but here's a sample. The rest is found here (page 45 of 48):
http://static.fmgsuite.com/media/docume ... ef3871.pdf

Image

Pop Quiz:
How many years since 1999 was USA the top performing country for stock market returns (for developed markets)?

Time's Up.

Answer: just once. 2014.

Even Canada, Austria and New Zealand made it to the top twice. What's wrong with the U.S.A.?

Tiny Finland made it to the top 4 times!

In fact in 1999 Finland's stock market was up 130.7% higher than the U.S.!! (152.6% finland vs. 21.9% U.S.A.)

So now ask yourself why you don't just invest 100% of your money in Finland?
Last edited by arcticpineapplecorp. on Thu Nov 07, 2019 9:48 pm, edited 1 time in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

junior
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by junior » Thu Nov 07, 2019 8:12 pm

simpleidiot wrote:
Thu Nov 07, 2019 7:48 pm

Feel free to chime in one why you think such a large international component is wiser.

thank you!
Vanguard thinks it's wiser. That means a lot to me... and not a lot to some other folks who think they know better than all the people who make these target date funds at various companies.

If you think you're smarter than Vanguard, Schwab, Fidelity and all the rest of the employees of these companies, buy 3 funds with a tilt to U.S. stock and re-balance once a year. It'll take less than an hour of your time once a year.

aristotelian
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by aristotelian » Thu Nov 07, 2019 8:16 pm

Vanguard Balanced Index.

rkhusky
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by rkhusky » Thu Nov 07, 2019 8:19 pm

Perhaps an earlier Target Retirement plan plus Total Stock Market. Or a later Target Retirement plan plus Total Bond.

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simpleidiot
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by simpleidiot » Thu Nov 07, 2019 8:22 pm

I love the response APC! Thanks for the interesting chart of winners.

I of course do not think I am wiser than the market, my username (and love for Vanguard and Jack Bogle) demonstrate my utter humility.
My phrase "I am aware the next 10 years may be different" demonstrate that I agree with your assessment that I am suffering from recency bias and that things tend to change.

Thanks for cluing me in that the US is ~55% of the world equities market. So at 62% of my stock allocation in VFIFX, I am not terribly USA over-represented.

So what's your take? Should we seek to match the US vs world ratio? Or since I indeed make my income in the USA, perhaps I should flip to 90/10 world to take better advantage of the Flying Finns of future years!

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fortfun
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by fortfun » Thu Nov 07, 2019 8:26 pm

smalliebigs wrote:
Thu Nov 07, 2019 7:53 pm
Why don't you just build your own? There's nothing inherently special about the TDFs other than the glide path, which you can do on your own
Special: They rebalance themselves everday.
You don't need to look at them, which means:
You won't be tempted to tweak them.
You won't panic and sell when the market crashes (because you don't have to look at them to rebalance.)

I think those are a few things that make them special but I understand your point to. However, I think TDF and life strategies might be the best bet for the average investor.

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jhfenton
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by jhfenton » Thu Nov 07, 2019 8:43 pm

simpleidiot wrote:
Thu Nov 07, 2019 7:48 pm
Feel free to chime in one why you think such a large international component is wiser.
You're performance chasing. It is the all-time most popular investment mistake.

Disclaimer: I've never understood the performance-chasing urge at all. In 98 and 99, I went heavy into small-cap value and emerging markets--with our tiny portfolio--because they had underperformed. It worked out very well, which--for better or worse--reinforced my natural instincts.

At this point, we're up to 50/50 US/ex-US, with half of the ex-US in emerging markets. The more ex-US underperforms, the more I want to increase my allocation. I constantly have to fight the urge to bump it to 45/55. (Maybe I should.)

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arcticpineapplecorp.
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by arcticpineapplecorp. » Thu Nov 07, 2019 9:52 pm

simpleidiot wrote:
Thu Nov 07, 2019 8:22 pm
So what's your take? Should we seek to match the US vs world ratio? Or since I indeed make my income in the USA, perhaps I should flip to 90/10 world to take better advantage of the Flying Finns of future years!
the target date retirement fund is close enough to world market cap and the reason vanguard picked it is because it's the greatest reduction of volatility (at 40%. Used to be 30% was the sweet spot). See here (page 5):

https://www.vanguard.com/pdf/ISGGEB.pdf

I wouldn't flip to 90% international/ 10% U.S. because of the increased volatility and you're dealing with more currency risk. Vanguard is helping you by picking an allocation (of U.S. to International) that should allow you to sleep at night. Now the allocation between stocks and bonds you're holding (90 stock/10 bonds) is another story. Are you prepared for the kinds of losses that are possible with that much in equities? If stocks lost 50% between Oct 2007-Feb 2009 a 90/10 portfolio would have been down around 40 some percent:

https://personal.vanguard.com/us/insigh ... ns?lang=en
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Phineas J. Whoopee
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by Phineas J. Whoopee » Fri Nov 08, 2019 6:51 pm

aristotelian wrote:
Thu Nov 07, 2019 8:16 pm
Vanguard Balanced Index.
To expand on the thought, Vanguard's Balanced Index Fund, VBIAX, has no international component at all. If you don't want any, it could be an adequate choice. Unlike the target retirement funds it has no glide path, however. It stays 60% stock, 40% bonds. It's possible that's also what you want.

PJW

lostdog
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by lostdog » Fri Nov 08, 2019 7:06 pm

junior wrote:
Thu Nov 07, 2019 8:12 pm
simpleidiot wrote:
Thu Nov 07, 2019 7:48 pm

Feel free to chime in one why you think such a large international component is wiser.

thank you!
Vanguard thinks it's wiser. That means a lot to me... and not a lot to some other folks who think they know better than all the people who make these target date funds at various companies.

If you think you're smarter than Vanguard, Schwab, Fidelity and all the rest of the employees of these companies, buy 3 funds with a tilt to U.S. stock and re-balance once a year. It'll take less than an hour of your time once a year.
+1

Are you confident in the arm chair "All In" U.S. equities arm chair experts on this site or the three powerhouse firms above?
VTWAX and chill.

Golfview
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by Golfview » Fri Nov 08, 2019 7:10 pm

+1 Vanguard Balanced Index

Dandy
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Re: Is there any vanguard fund similar to Target Retirement NOT so intl heavy??

Post by Dandy » Sat Nov 09, 2019 7:55 am

I use Balanced Index in my TIRA but since it is 60% equities it is a bit high for my taste so I also use Wellesley Income to lower the overall equity exposure. I like the combination and the fact that all my TIRA equity exposure is rebalanced.

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