Vanguard - How America Invests

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tj
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Vanguard - How America Invests

Post by tj »

https://personal.vanguard.com/pdf/how-a ... s-2020.pdf

Lots of interesting data!

Overall, people seem to be 82%/18% domestic/international.

Those over 45 seem to have more invested in stocks than the target date funds do.
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arcticpineapplecorp.
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Re: Vanguard - How America Invests

Post by arcticpineapplecorp. »

Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:

Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs). By contrast, TDF investors are slightly less likely to trade than households overall. TDF traders typically make small portfolio changes and are less likely to be frequent traders than ETF or individual security investors. In part these differences may reflect the built-in rebalancing and trading inherent in a TDF strategy.

Trading activity is mixed About half of traders are self-directed or advised clients rebalancing accounts, yet a third are characterized as “frequent traders,” trading at least seven times per year.
are any of you individual security and ETF holders "frequent traders"??
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UpperNwGuy
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Re: Vanguard - How America Invests

Post by UpperNwGuy »

arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:

Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs). By contrast, TDF investors are slightly less likely to trade than households overall. TDF traders typically make small portfolio changes and are less likely to be frequent traders than ETF or individual security investors. In part these differences may reflect the built-in rebalancing and trading inherent in a TDF strategy.

Trading activity is mixed About half of traders are self-directed or advised clients rebalancing accounts, yet a third are characterized as “frequent traders,” trading at least seven times per year.
are any of you individual security and ETF holders "frequent traders"??
I assume a trade is defined as a sale-and-purchase, not as a purchase with dividends or new money. I go entire years without selling anything, but I purchase every month with new money. I don't think that makes me a trader.
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hornet96
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Re: Vanguard - How America Invests

Post by hornet96 »

UpperNwGuy wrote: Fri Apr 16, 2021 9:14 pm
arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:

Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs). By contrast, TDF investors are slightly less likely to trade than households overall. TDF traders typically make small portfolio changes and are less likely to be frequent traders than ETF or individual security investors. In part these differences may reflect the built-in rebalancing and trading inherent in a TDF strategy.

Trading activity is mixed About half of traders are self-directed or advised clients rebalancing accounts, yet a third are characterized as “frequent traders,” trading at least seven times per year.
are any of you individual security and ETF holders "frequent traders"??
I assume a trade is defined as a sale-and-purchase, not as a purchase with dividends or new money. I go entire years without selling anything, but I purchase every month with new money. I don't think that makes me a trader.
+1. I was wondering the same thing. We make regular purchases twice a month but hardly ever sell anything. Does that make us frequent traders? :confused
Jacotus
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Re: Vanguard - How America Invests

Post by Jacotus »

arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:
Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs).
are any of you individual security and ETF holders "frequent traders"??
I'd speculate that most of the frequent traders are driven away to other brokerages, so those who remain tend not to be highly active.
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Re: Vanguard - How America Invests

Post by MrJedi »

hornet96 wrote: Fri Apr 16, 2021 9:19 pm
UpperNwGuy wrote: Fri Apr 16, 2021 9:14 pm
arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:

Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs). By contrast, TDF investors are slightly less likely to trade than households overall. TDF traders typically make small portfolio changes and are less likely to be frequent traders than ETF or individual security investors. In part these differences may reflect the built-in rebalancing and trading inherent in a TDF strategy.

Trading activity is mixed About half of traders are self-directed or advised clients rebalancing accounts, yet a third are characterized as “frequent traders,” trading at least seven times per year.
are any of you individual security and ETF holders "frequent traders"??
I assume a trade is defined as a sale-and-purchase, not as a purchase with dividends or new money. I go entire years without selling anything, but I purchase every month with new money. I don't think that makes me a trader.
+1. I was wondering the same thing. We make regular purchases twice a month but hardly ever sell anything. Does that make us frequent traders? :confused
They defined trade in the article:
We define “trading” as the act of moving money from
one investment option to another within an account.
000
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Re: Vanguard - How America Invests

Post by 000 »

People sure are sitting on a lot of cash at Vanguard:
The average portfolio consists of 63% equities (stocks), 16% fixed income (bonds), and 21% cash (short-term reserves).
I guess "stay the course" applies even to not paying attention to how much your money market fund is yielding. :oops:
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Re: Vanguard - How America Invests

Post by Grt2bOutdoors »

arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
Vanguard households trade infrequently Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. Most traders’ behavior is consistent with rebalancing or is professionally advised...

Trading and product holdings are correlated:

Households with individual securities and ETFs are more than three times as likely to trade as Vanguard households overall. This, in part, reflects the restrictions on frequent trading in mutual funds as well as traders’ preferences to use vehicles where they can trade freely (and where they incur their own transaction costs). By contrast, TDF investors are slightly less likely to trade than households overall. TDF traders typically make small portfolio changes and are less likely to be frequent traders than ETF or individual security investors. In part these differences may reflect the built-in rebalancing and trading inherent in a TDF strategy.

Trading activity is mixed About half of traders are self-directed or advised clients rebalancing accounts, yet a third are characterized as “frequent traders,” trading at least seven times per year.
are any of you individual security and ETF holders "frequent traders"??
Yes - I trade frequently, with every paycheck. Who wrote this analysis? If someone is paid 12 times a year, and pays themselves first they are classified as “frequent traders”? Guilty as charged.
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Re: Vanguard - How America Invests

Post by Nathan Drake »

Vanguard investors look far too exposed to US imho. But home country bias is a real thing.
Last edited by Nathan Drake on Sat Apr 17, 2021 1:46 am, edited 2 times in total.
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Re: Vanguard - How America Invests

Post by vanbogle59 »

000 wrote: Fri Apr 16, 2021 11:47 pm People sure are sitting on a lot of cash at Vanguard:
The average portfolio consists of 63% equities (stocks), 16% fixed income (bonds), and 21% cash (short-term reserves).
I guess "stay the course" applies even to not paying attention to how much your money market fund is yielding. :oops:
" 22% hold very risky portfolios containing at least 98% equities."

let's call it a "normal" distribution
000
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Re: Vanguard - How America Invests

Post by 000 »

tj wrote: Fri Apr 16, 2021 9:07 pm Overall, people seem to be 82%/18% domestic/international.

Those over 45 seem to have more invested in stocks than the target date funds do.
More evidence for the US stocks bubble. :twisted:
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Re: Vanguard - How America Invests

Post by dboeger1 »

000 wrote: Fri Apr 16, 2021 11:47 pm People sure are sitting on a lot of cash at Vanguard:
The average portfolio consists of 63% equities (stocks), 16% fixed income (bonds), and 21% cash (short-term reserves).
I guess "stay the course" applies even to not paying attention to how much your money market fund is yielding. :oops:
I wonder how much of that is for withdrawals during retirement or perhaps "dry powder" getting ready to be invested. I'm still in accumulation and generally have buys pull from my Ally checking account so I don't ever have cash sitting in Vanguard, but I wonder if retirees might use it as sort of a bank and let dividends and living expenses pile up in there. 22% is still way higher than I would have imagined, but some of that has to be just normal money management.
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Re: Vanguard - How America Invests

Post by 000 »

dboeger1 wrote: Sat Apr 17, 2021 12:58 am I wonder if retirees might use it as sort of a bank and let dividends and living expenses pile up in there.
Probably. Some posters have discussed keeping large balances in the Federal Money Market fund. When I pointed out the difference in yield (40bp+ at the time) between that and a high yield savings account, I was told "it wasn't enough to matter". :?
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Re: Vanguard - How America Invests

Post by celia »

MrJedi wrote: Fri Apr 16, 2021 10:20 pm
arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm are any of you individual security and ETF holders "frequent traders"??
They defined trade in the article:
We define “trading” as the act of moving money from
one investment option to another within an account.
We have over a dozen accounts at Vanguard: Her separate Taxable, His separate Taxable, Joint Taxable, Her IRA, His Ira, Her Roth, His Roth, His Inherited IRA, His Inherited Roth, plus trust assets for family members. Each account needs at least one trade a year (even if it is the same rebalancing action in each account). So I guess that makes us "frequent traders".

Their definition doesn't seem to count money coming in to an account or going out or Roth conversions (which is money going out and coming in) or doing "upgrades" to Vanguard brokerage accounts, or automatic re-investment of dividends. That's a LOT of uncounted transactions!
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Re: Vanguard - How America Invests

Post by Adam Mundorf »

Nathan Drake wrote: Sat Apr 17, 2021 12:12 am Vanguard investors look far too exposed to US imho. But home country bias is a real thing.
It does seem very strange. I would expect with all the international allocations in target retirement funds, it would be more balanced.
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Re: Vanguard - How America Invests

Post by asset_chaos »

We define “trading” as the act of moving money from one investment option to another within an account.
I wonder how they consider dividend redirection? That moves money from one investment to another. I'm retired and direct dividends to money market because I will or may want to spend that money. Between bond funds that distribute monthly and stock funds that distribute quarterly, that could be construed as 16 trades a year. I don't feel like a frequent trader, but it seems technically from that definition that Vanguard could consider me one. C'est la vie: it's probably not the first data pool I've contaminated.
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Re: Vanguard - How America Invests

Post by watchnerd »

arcticpineapplecorp. wrote: Fri Apr 16, 2021 9:10 pm
are any of you individual security and ETF holders "frequent traders"??
Every quarter, as my ESPP shares vest.

Is that frequent?

Plus, I own some geared stuff...
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Re: Vanguard - How America Invests

Post by manatee2005 »

Why is everyone so fixated on the frequent trading term.

Do you really think Vanguard would classify someone who deposits money in the account every paycheck to buy a fund or a stock as active trader? Or somebody who reinvests dividends? C'mon people.
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Re: Vanguard - How America Invests

Post by typical.investor »

000 wrote: Sat Apr 17, 2021 12:21 am
tj wrote: Fri Apr 16, 2021 9:07 pm Overall, people seem to be 82%/18% domestic/international.

Those over 45 seem to have more invested in stocks than the target date funds do.
More evidence for the US stocks bubble. :twisted:
It's my thought too. If you believe US treasury data, then foreign ownership of US stock* is around 28.6%. That is up from about 12.8% in 2002.

Not that I am calling US valuations a bubble, but there do seem to be global flows into the US which would not only boost US equity priced but strengthen the USD making returns on foreign stocks even less attractive.

* https://datawrapper.dwcdn.net/vRCul/1/

Note: my percents differ slightly than the numbers in the link because the graph is foreign holdings of US equities VS the S&P500 which isn't the US market. My percents are foreign holdings of US equities / 1.2X S&P500 [too lazy to look up total market cap each year].
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Re: Vanguard - How America Invests

Post by Soon2BXProgrammer »

vanbogle59 wrote: Sat Apr 17, 2021 12:19 am " 22% hold very risky portfolios containing at least 98% equities."

let's call it a "normal" distribution
Guilty as charged... but misleading.. I hold all of my bonds elsewhere... So to vanguard, i look like a 100% equities investor.

if someone analyzed my 401k/TSP and saw i mostly only hold stable value and TSP G fund... they would say i'm overly conservative.
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Re: Vanguard - How America Invests

Post by life in slices »

Soon2BXProgrammer wrote: Sat Apr 17, 2021 7:40 am
vanbogle59 wrote: Sat Apr 17, 2021 12:19 am " 22% hold very risky portfolios containing at least 98% equities."

let's call it a "normal" distribution
Guilty as charged... but misleading.. I hold all of my bonds elsewhere... So to vanguard, i look like a 100% equities investor.

if someone analyzed my 401k/TSP and saw i mostly only hold stable value and TSP G fund... they would say i'm overly conservative.
Same - I am 70/30 AA across my accounts but 100% equities at vanguard as my retirement accounts are at Fidelity
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Re: Vanguard - How America Invests

Post by watchnerd »

typical.investor wrote: Sat Apr 17, 2021 4:34 am but there do seem to be global flows into the US which would not only boost US equity priced but strengthen the USD making returns on foreign stocks even less attractive.
Currency baskets have interesting correlations to stocks and bonds, often negative.

I added the Bloomberg USD index to my port.
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Re: Vanguard - How America Invests

Post by watchnerd »

manatee2005 wrote: Sat Apr 17, 2021 4:17 am Why is everyone so fixated on the frequent trading term.

Do you really think Vanguard would classify someone who deposits money in the account every paycheck to buy a fund or a stock as active trader? Or somebody who reinvests dividends? C'mon people.
Probably not those mundane activities, no.

But Vanguard doesn't even let you buy leveraged ETFs.

Unlike Fidelity or Schwab.
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Re: Vanguard - How America Invests

Post by abuss368 »

I really thought the international stock allocations would be higher for the DIY (non advisor) investors. Not so much international bonds, but stock.

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Re: Vanguard - How America Invests

Post by watchnerd »

The cash holdings are high enough to generate scorn and ridicule on this forum:

63% equities (stocks), 16% fixed income (bonds), and 21% cash (short-term reserves).
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Re: Vanguard - How America Invests

Post by JD2775 »

Nathan Drake wrote: Sat Apr 17, 2021 12:12 am Vanguard investors look far too exposed to US imho. But home country bias is a real thing.
I think things like these need to be taken with a grain of salt. For example in Vanguard I have my Roth and Taxable. Both 100% US based stock index funds. My 401k in Merrill Lynch is where I have my Bonds and Int Index funds. To Vanguard though I am 100% US stock index
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Re: Vanguard - How America Invests

Post by LadyGeek »

I removed a contentious interchange which may be the result of a misunderstanding. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
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Re: Vanguard - How America Invests

Post by celia »

watchnerd wrote: Sat Apr 17, 2021 10:18 am The cash holdings are high enough to generate scorn and ridicule on this forum:
63% equities (stocks), 16% fixed income (bonds), and 21% cash (short-term reserves).
But it is also possible that some/most of that cash is new money coming in regularly, about to be invested. After all, the report covers 5 million households with an average household balance of $61K. If 21% of that is cash, that means the average household holds less than $13K in cash.

In my case, the bond interest is so low and sometimes the NAV in bond funds decreases, so cash (a Money Market fund) is an alternate to bonds.
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Re: Vanguard - How America Invests

Post by DB2 »

The smaller allocation to International doesn't surprise me at all...just because so many on this board are anti-international. If I had a dollar for every person only in VTSAX or VTI for equity, I could retire today. :happy
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