Vanguard PAS during recent crisis

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Glamdring
Posts: 4
Joined: Mon May 11, 2015 9:16 pm

Vanguard PAS during recent crisis

Post by Glamdring » Thu Mar 26, 2020 10:19 am

I have generally been pleased with PAS. But during the current crisis I am disturbed that I did not see my portfolio get a rebalance on the worst few days. Did anyone get a rebalance?

Using my poor arithmetic skills, I judge I was almost out of balance at a hair short of 5%. The maniacal policy of Vanguard probably requires a full 5%(or more) before triggering the rebalance and I lost a probable money making opportunity. Anyone else with this issue and any thoughts on how to avoid this issue next time?

dbr
Posts: 32173
Joined: Sun Mar 04, 2007 9:50 am

Re: Vanguard PAS during recent crisis

Post by dbr » Thu Mar 26, 2020 10:22 am

Glamdring wrote:
Thu Mar 26, 2020 10:19 am
I have generally been pleased with PAS. But during the current crisis I am disturbed that I did not see my portfolio get a rebalance on the worst few days. Did anyone get a rebalance?

Using my poor arithmetic skills, I judge I was almost out of balance at a hair short of 5%. The maniacal policy of Vanguard probably requires a full 5%(or more) before triggering the rebalance and I lost a probable money making opportunity. Anyone else with this issue and any thoughts on how to avoid this issue next time?
I don't have this issue, but the obvious fix if VPAS did not do quite what you wanted would be to do it yourself. I don't know if VPAS can block you from trading in your assets if you want to, can they?

You could also talk to your advisor and ask them for an explanation.

User avatar
WoodSpinner
Posts: 1309
Joined: Mon Feb 27, 2017 1:15 pm

Re: Vanguard PAS during recent crisis

Post by WoodSpinner » Thu Mar 26, 2020 10:25 am

OP,

There is a bit of hindsight bias going on here....

I didn’t rebalance at 4.98% either and don’t think of it as a maniacal mistake.

WoodSpinner

panhead
Posts: 420
Joined: Fri Feb 22, 2013 10:53 am

Re: Vanguard PAS during recent crisis

Post by panhead » Thu Mar 26, 2020 10:29 am

WoodSpinner wrote:
Thu Mar 26, 2020 10:25 am
OP,

There is a bit of hindsight bias going on here....

I didn’t rebalance at 4.98% either and don’t think of it as a maniacal mistake.

WoodSpinner
This.
I was about 4.8% high and didn't rebalance.
Had I known what was going to happen, I would've sold everything, assuming of course I would know when to get back in.
I didn't, and don't.
It's a plan, it worked the way it was supposed to, and I'm happy with that.

GmanJeff
Posts: 582
Joined: Sun Jun 11, 2017 7:12 am

Re: Vanguard PAS during recent crisis

Post by GmanJeff » Thu Mar 26, 2020 2:35 pm

From the PAS brochure: Restrictions on Portfolio accounts -
While enrolled in the ongoing advised service, you shouldn’t
purchase or sell securities in your Portfolio without prior
assistance from an advisor, and you may be restricted from
such activity until you terminate the ongoing advised service.
Transactions performed in a Portfolio enrolled in the ongoing
advised service without prior notice to us may be reversed
or unwound to maintain the recommended allocation for your
Portfolio.

Also:
Adjusting the Portfolio asset allocation -
This section about adjustments to the Portfolio asset
allocation applies to those clients who have enrolled in
the ongoing advised service. Each quarter (with timing
determined by your contract anniversary date, or otherwise
agreed upon with an advisor), the ongoing advised service
will review your target allocation as illustrated in the asset
allocation schedule found in your financial plan in relation to
your investment time horizon to determine if any changes
in the target asset allocation you approved as part of your
ongoing financial plan are recommended. If the ongoing
advised service recommends changes to the Portfolio’s
target allocation, we may also make recommendations with
respect to the purchase or sale of securities in the Portfolio
to meet the new target asset allocation and reflect your
progress along the asset allocation schedule.
If your ability to bear risk, your investment time horizon,
your financial situation, or your overall investment objectives
change, you should notify an advisor or update your
information so the ongoing advised service can take these
considerations into account when reviewing your asset
allocation target. We won’t change the recommended asset
allocation based on current or prevailing market conditions
but may recommend a different asset allocation based on
changes to your financial situation or investment objectives.
If we recommend a different asset allocation, you’ll receive a
new financial plan for your review and approval.

Miriam2
Posts: 2811
Joined: Fri Nov 14, 2014 11:51 am

Re: Vanguard PAS during recent crisis

Post by Miriam2 » Thu Mar 26, 2020 5:35 pm

Recently posted by siamond on the Boston Bogleheads local chapter thread :D
siamond wrote: Image

inverter
Posts: 223
Joined: Mon Jul 27, 2015 1:40 pm

Re: Vanguard PAS during recent crisis

Post by inverter » Thu Mar 26, 2020 5:51 pm

They rebalance as specified intervals at the poster says above to prevent any one day or situation clouding the overall financial plan and judgement required for long term financial planning.

tibbitts
Posts: 9766
Joined: Tue Feb 27, 2007 6:50 pm

Re: Vanguard PAS during recent crisis

Post by tibbitts » Thu Mar 26, 2020 5:59 pm

Glamdring wrote:
Thu Mar 26, 2020 10:19 am
I have generally been pleased with PAS. But during the current crisis I am disturbed that I did not see my portfolio get a rebalance on the worst few days. Did anyone get a rebalance?

Using my poor arithmetic skills, I judge I was almost out of balance at a hair short of 5%. The maniacal policy of Vanguard probably requires a full 5%(or more) before triggering the rebalance and I lost a probable money making opportunity. Anyone else with this issue and any thoughts on how to avoid this issue next time?
I seriously doubt there was a "maniacal" policy at work. Did you - or do you now - fully understand under what conditions rebalancing would occur? How would you have felt if the market dropped 20% more after PAS had rebalanced - would that have been PAS being "maniacal" and rebalancing too soon?

Seriously you had no business ever being in PAS, so the solution is to manage your own investments.

User avatar
Kenkat
Posts: 5945
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Vanguard PAS during recent crisis

Post by Kenkat » Thu Mar 26, 2020 6:34 pm

inverter wrote:
Thu Mar 26, 2020 5:51 pm
They rebalance as specified intervals at the poster says above to prevent any one day or situation clouding the overall financial plan and judgement required for long term financial planning.
Also, “they” means the Vanguard computer system. No one is checking every portfolio every day. If the computer was told to rebalance when your account hits a 5% delta, it won’t rebalance until it hits that exact number or more. Computers are smart or stupid that way depending on your outlook.

Post Reply