Vanguard lifestrategy funds

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Vanguard lifestrategy funds

Post by HotRod140 » Sun Mar 22, 2009 6:38 pm

can anybody tell me the difference between these funds and the target retirement funds? are the lifestrategy funds good for a all in one diverse portfolio in a tax deferred account. Is it also recommended for a taxable account.time frame of at least 10 years. Thanks in advance.

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Post by OhioGozaimas » Sun Mar 22, 2009 7:41 pm

LifeStrategy funds are target-risk, rather than being target-age as the TR funds are. Either type would work as a one-fund investment.

The four LS funds rebalance to a particular equity percentage, which does not decline over time. If you use LS funds, you likely will want to down-shift the equity portion of your assets (by moving to a more conservative fund) as retirement approaches.

If you are a ways from retirement, and don't want 80-90 percent equities of the longer-date TR funds, you could start with the desired LS fund. Then, if desired at some point, you could switch to a relatively short-dated TR fund once it is well upon its declining "glide-path."

Both LS and TR are probably better in tax-deferred, but there may be different opinions about taxable.

Good luck!
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Post by DSInvestor » Sun Mar 22, 2009 7:49 pm

Here's some more information from the bogleheads wiki: ... ment_Funds

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Post by chaz » Sun Mar 22, 2009 8:03 pm

I'm a fan of Vanguard TR funds. Great diversification at low cost with automatic rebalancing.

Good luck.
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Post by CABob » Sun Mar 22, 2009 8:09 pm

One thing that may be a significant difference is the the LS funds contain the Asset Allocation fund. This is an actively managed fund that contains both stock and bonds and may change its stock/bond ratio periodically. IIRC its stock allocation has been in the 80%-100% range in recent years.
Both the TS and the LS funds have allocations to bonds which make them somewhat tax inefficient and are best not held in taxable accounts for those in the accumulation phase.

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Post by DaveS » Mon Mar 23, 2009 9:15 am

Life Strategy Moderate Growth is 40% Bonds 15% Int and 45% domestic year after year. Target retirement funds the equity portion diminishes over time. If you don't have enough to invest in multiple funds Life Strategy is a good place to start. Dave

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Post by digit8 » Mon Mar 23, 2009 5:05 pm

If I had to chose, I would pick TR over LS for a taxable account. It's not impossible that TR will make changes in it's strategy, but for the most part it's on a fairly slow, steady glide path and, after all, most are 100% index funds. The Asset Allocation fund's managed and fluid nature makes LS a bit more unpredictable and more likely to generate taxable events.

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Vanguard lifestrategy funds

Post by HotRod140 » Mon Mar 23, 2009 6:21 pm

Thanks for the help. I still havent decided yet. I guess I cant go wrong with either. (diversity wise anyway)

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Post by joe8d » Mon Mar 23, 2009 7:57 pm

Thanks for the help. I still haven't decided yet. I guess I cant go wrong with either. (diversity wise anyway)
Why not have both? My Roth consists of a LS/TR fund blend.In fact,I believe VG even suggests that as an possible option in retirement accounts.
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Vanguard lifestrategy funds

Post by HotRod140 » Tue Mar 24, 2009 5:32 am

hey Joe

Do you have a link where vanguard suggests the two together. I would like to read about that.


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Post by nisiprius » Tue Mar 24, 2009 8:46 am

My opinion/guess is that simplest answer is that the LifeStrategy funds are a legacy. They were available long before the Target Retirement Funds were created. They go back to 1994, whereas the xxx5 target funds were only started in 2003, and the xxx0's only in 2006.

My flip (and uninformed) answer is that maybe they don't have any particular reason for existence, beyond just being there because people still hold them.

An indication that the LifeStrategy funds are long in the tooth is their use of Vanguard's Asset Allocation fund. Asset allocation funds were all the rage back then. People bought the idea that "expert" managers could predict whether stocks or bonds would do better and shift asset allocations accordingly. The Wall Street Journal used to run a column comparing experts' allocations and how they had done against a 60/40 "robot mix." The theory was pretty well exploded but the Asset Allocation fund goes merrily on, putting its capricious shifts into all the LifeStrategies funds.

Yes, I am personally annoyed at Vanguard about it, because my wife, who hates fussing with investing, put her entire Roth in the Vanguard Conservative Growth Fund and left it there. Just what she was supposed to do. Vanguard proceeded to peg the Asset Allocation fund at 100% stock and hold it there, bringing the fund well above the 40% stocks it is supposed to hold. Not a big deal, the Asset Allocation fund only accounts for 1/4 of the fund's holdings, but I think the fund was and is annoyingly riskier than my wife thought. Blame her for not knowing what they mean by "conservative" these days, if you like.

In my arrogant opinion, the LifeStrategy funds ought to be simple balanced funds with fixed allocations. I suppose some people holding these funds really want an expert-tuned asset allocation and would be distressed if they went to fixed percentages, but I wonder how many.

Fidelity used to have a varying "asset manager" fund, but it has morphed into a family of funds named Asset Manager 20%, Asset Manager 30%, ... Asset Manager 85%, named for the percentage of stocks they are targeted to hold.

That sounds like a better idea. Simple and straightforward. But, of course, the funds themselves... well, Fidelity says
Richard Habermann maintains the overall asset allocation targets and makes controlled shifts in allocation to the various sub-portfolios, including domestic and international stocks, investment-grade and high-yield fixed income, and short-term securities, to capitalize on market dynamics. As market conditions change, he can make modest adjustments in the asset allocation weightings, but he never strays far from the neutral asset allocation mix."
How far does he stray? I don't feel like researching it. This straying costs Fidelity in the form of a 1.69% ER in one of these funds, which they subsidize down to 0.65%. Boo.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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