explanation in lifestyle portfolio

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HotRod140
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explanation in lifestyle portfolio

Post by HotRod140 » Thu Apr 02, 2009 7:32 pm

Can anyone explain the Vanguard Asset Allocation Fund Investor Shares part of the portfolio in these funds. I am looking at one of these funds for a possible all in one fund for all of my IRA money. thanks

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Taylor Larimore
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Asset allocation fund in life strategy funds ?

Post by Taylor Larimore » Thu Apr 02, 2009 7:42 pm

HotRod140 wrote:Can anyone explain the Vanguard Asset Allocation Fund Investor Shares part of the portfolio in these funds. I am looking at one of these funds for a possible all in one fund for all of my IRA money. thanks
In my opinion, including the Asset Allocation Fund in the Life Strategy funds was a mistake and one reason Vanguard started their Target Retirement Funds.
"Simplicity is the master key to financial success." -- Jack Bogle

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HotRod140
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explanation in lifestyle portfolio

Post by HotRod140 » Thu Apr 02, 2009 7:49 pm

Hey Taylor can you explain what that part of the fund is? Thanks

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CABob
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Post by CABob » Thu Apr 02, 2009 7:52 pm

There is not much I can add to Vanguard's fund description which can be found at https://personal.vanguard.com/us/funds/ ... IntExt=INT
It is a managed fund that can contain both stocks and bonds with its allocation percentages changing as its managers see fit. It currently contains about 90% equities and has ranged from 80% to 100% equities in the past few years. It's performance has seen the effects of the recent market performance. Because of its changing allocations the fund is not thought of too highly by many on this forum. There have been a number of discussions regarding this fund on this forum. A search might provide more insight.
Bob

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Taylor Larimore
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Asset Allocation funds seldom work

Post by Taylor Larimore » Thu Apr 02, 2009 8:00 pm

HotRod140 wrote:Hey Taylor can you explain what that part of the (AA) fund is? Thanks
Yes. The Asset Allocation Fund is very close to 25% of the portfolio in each of the four AA Funds.

While researching your question, I also learned that the Asset Allocation Fund is in the bottom 25% of all Moderate Allocation funds during the past 1, 3, 5, and 10-year periods.

This underperformance is interesting because during the past 10 years we have had two bear markets and (arguably) 2 bull markets when an asset allocation fund, if it worked, should do well.
"Simplicity is the master key to financial success." -- Jack Bogle

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HotRod140
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Joined: Tue Apr 15, 2008 12:24 pm

explanation in lifestyle portfolio

Post by HotRod140 » Thu Apr 02, 2009 8:09 pm

thanks for the help. I think I will stay away from these funds

burge123
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Post by burge123 » Thu Apr 02, 2009 9:47 pm

Since it has been almost all stock for so long, perhaps the Asset Allocation fund should be considered a large cap equity fund rather than a balanced fund. (This is Morningstar's recommendation.) It does outperform VFINX in the 1 , 5 , and 10 year averages. On its own, I think Asset Allocation would be a very rough ride. As a part of Lifestrategy's stock allocation though, I think it does fine. And for what it's worth, I did not see the TR funds blowing away their LifeStrategy equivalents in the past year!

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