Vanguard 3 Fund beats big endowments

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Vanguard 3 Fund beats big endowments

Post by EvelynTroy » Mon Feb 05, 2018 9:32 am

From the ever sensible Ben Carson - ... ent-model/

you can see the simple Vanguard portfolio was safely in the top quartile in both the 3 and 10 year time frames. It handily outperformed the average endowment over 1, 3, 5 and 10 years. Save for the 5 year numbers, this low-cost portfolio also bested those funds with more than $1 billion, often seen as some of the most sophisticated investment offices in the country.

As someone said - "the majesty of simplicity!"


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Re: Vanguard 3 Fund beats big endowments

Post by willthrill81 » Mon Feb 05, 2018 2:39 pm

While interesting, that article comes to a rather obvious conclusion: during a nearly decade long bull run in stocks, a portfolio comprised of 80% stocks beat a bunch of other portfolios ranging from 32% to 56% stocks. What a shocker! If you adjust the 3 fund portfolio to only being 50% in stocks, then the results are right in line with the endowments.

This is the same mistake made by a prominent poster who frequently compares a 3 fund portfolio with 80% in stocks to a range of other portfolios that have a lesser allocation to stocks and claims that the 3 fund is superior since it has had higher returns.

A buy-and-hold portfolio's AA determines its long-term returns more so than probably any other factor.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Vanguard 3 Fund beats big endowments

Post by greg24 » Mon Feb 05, 2018 2:44 pm

The breakdown by fund is 53% U.S. stocks (VTSMX), 27% foreign stocks (VGTSX), and 20% U.S. bonds (VBMFX). The reason for the 80/20 stock/bond split is because most alternative portfolios are heavily invested in equities, often with leverage involved so this is a close approximation to the asset mix for these organizations.

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Re: Vanguard 3 Fund beats big endowments

Post by baconavocado » Mon Feb 05, 2018 2:55 pm

Add pension funds to the list of investment organizations that constantly throw away money at the latest investing trends - hedge funds! all-star fund managers! leverage! real estate! commodities! cryptocurrencies! momentum trading! - only to under-perform index funds.

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