j0e0r7 wrote: ↑
Thu Sep 20, 2018 2:43 pm
azanon wrote: ↑
Thu Sep 20, 2018 8:09 am
j0e0r7 wrote: ↑
Wed Sep 19, 2018 8:39 pm
Right. When REITs were all the rage (even look at this board c. 2007) and people were clamoring for them to add that asset class, the TSP held fast against that fad. IMO the glide path really had to change. I'm relatively risk-averse, but the L funds went way beyond what I'd ever want in bond % near retirement. People accusing the TSP board of market timing don't seem to know how ultraconservative the board really is.
Virtually no one (not counting individuals; fund companies like Vanguard) added REITs to their balanced portfolios, with very few exceptions such as Vanguard's own Managed Payout Fund where the very purpose of the fund was to mirror an Ivy strategy. 98% held fast, including the TSP.
Holding 99% stocks at any point and time where you breath air, is anything but "ultra conservative".
Sorry for the confusion. I was referring to the addition of REITS as an asset class in the TSP, not as part of the L funds, but as an available fund in and of themselves.
I agree with you that 99% stocks is not ultraconservative. And I personally think they should have started at 10%. But for a 21-year-old freshly minted fed, where the glide path is set so that bonds are added in a timely manner, I'm not sure it's that far off.
Side note: as a middle-age person with a healthy amount of bonds, the Vanguard asset allocation questionnaire always recommends 100% stocks for me in my retirement fund. Crazy!
Re: addition of REITs as an asset class to TSP, I personally
wouldn't have an issue with that (though it could be harmful to others, as I'll explain). My original criticism against the TSP L fund and virtually all other balanced funds, is that they don't maintain the original allocation. So as long as the L fund didn't incorporate an REIT fund that was separately added later, then that wouldn't be the subject of my complaint. That being said, if I were on the TSP board, I would oppose its addition for the same reason that many other outlier asset classes are opposed, which is to prevent uninformed federal employees from having the ability to add up to 100% of a very narrowly focused, asset class.
Yes, you and I agree that the Vanguard asset class recommendations are too stock heavy - and I would add that virtually every one of these calculators are everywhere else too. That's recency bias at work. I don't see that changing until we have a longer, more drawn out bear market, like from 68' to 82'. History teaches that once upon a time, stocks were very frowned upon. I think the truth is in the middle, which is virtually all major asset class have an expected return that's comparable to the risk being taken for that return. "Risk Premiums" - not "Risk Premium, + a bonus on top of that because it's a superior asset class". Some very famous people, such as Warren B, outright say or suggest that stocks are superior. I think he's dead wrong.