Vanguard Star Fund

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HotRod140
Posts: 86
Joined: Tue Apr 15, 2008 12:24 pm

Vanguard Star Fund

Post by HotRod140 » Tue Jun 09, 2009 1:18 pm

Any opinions on this fund as an all in one investment for an IRA ? Is this a set it and forget it lazy type of investment.

knowmad
Posts: 465
Joined: Thu Feb 05, 2009 11:39 pm

Re: Vanguard Star Fund

Post by knowmad » Tue Jun 09, 2009 1:34 pm

HotRod140 wrote:Any opinions on this fund as an all in one investment for an IRA ? Is this a set it and forget it lazy type of investment.
The STAR expense ratio is too high and it invests in actively managed funds. Pick a Target Retirement Fund with the desired asset allocation instead. TR funds invest in passive index funds like TSM, TBM, etc.

jharri71
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Post by jharri71 » Tue Jun 09, 2009 1:41 pm

Even though the STAR expense ratio is higher than other Vanguard funds, it still is much lower than the industry standard. I am using STAR for my all-inclusive taxable account (15%) tax bracket. I combined three different trading accounts into STAR earlier this year and am completely happy so for.

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SpringMan
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Location: Michigan

Post by SpringMan » Tue Jun 09, 2009 1:44 pm

If you like a 60/40, stock/bond ratio and don't mind low cost active management, then VG Star fund fits the bill. It has a 1K minimum which is lower than all other Vanguard funds. I am mostly an indexer but have occasionally used Star fund as an active management bet. One down side is it has VG US Growth fund which has been an under performer from time to time. If an investor wants diversification with a low balance, VG Star is excellent. It has a .32% expense ratio. As with all Vanguard fund of funds, it does not charge more expense for the underlying funds. No admiral shares are available but as I see it Star is a starter fund, if you have 6 figures, there are probably better choices. I used it to fund a Vanguard Roth with $1K, later when my Roth hit $10K, I transferred it to Precious Metals and Mining fund. Maybe not smart but that is what I did. I have not ruled out VG Star for use in the future and like the fund.
Best Wishes, SpringMan

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Kenster1
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Post by Kenster1 » Tue Jun 09, 2009 1:59 pm

First, take a look at this Peter Bernstein article...."The 60/40 Solution"
http://www.equiuspartners.com/pdf/60-40 ... nstein.pdf

As others mentioned -- the Star Fund is a good option for those who wish to get started with only $1,000 minimum. You get a nicely diversified 60/40 stock/bond portfolio.

From 6/30/85 - 6/08/09, $10k initial investment would be worth:

VGSTX: $80,028 (VG Star)
VFINX: $83,704 (VG S&P 500)

Not bad considering Star holds ~40% bonds and had quite a bit less volatility.

If you can drum up $3k then one of the Target Retirement Funds is another option which automatically shifts from stocks to bonds over time as you age and need to reduce your risk. So that's an option too.
SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.

gavinman
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Post by gavinman » Tue Jun 09, 2009 4:32 pm

I started my wife's Roth IRA with the Star Fund last year and now it's over $5,000. I haven't made the switch to another fund yet because it's the only fund we have that has had a positive return lately. I'll probably move it to a Target Date Retirement Fund or something else sooner or later.

Her 403(b) is in the Target 2035 but the Star has been beating that lately too.

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