Vanguard 2045 Performance - Confused

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
ArkInfo
Posts: 2
Joined: Thu Jan 13, 2022 7:46 pm

Vanguard 2045 Performance - Confused

Post by ArkInfo »

Sorry for the super simple question, but I was looking into my 401k investment (Vanguard 2045 Target Retirement) and I noticed that the 1-Year performance had dropped significantly after an overall solid year. (The large part of this occurred December 28th - 29th.)

At first I assumed that this might have been due to underperforming bond / international allocation, but it seems that the 2050 and 2045 both have the same bond allocation, however the 2050 still performed better over the year.

They should both also be comprised of the same underlying mutual funds.

According to the breakdown on the Boglehead wiki and from I could gather online, the 2045 actually has slightly higher (0.1% allocation) Total Stock Market and 2050 has slightly higher (0.1%) Total International Market allocation.

(It also seems that VTSAX performed better than VTIAX.)

I'm hoping to learn why the variance in performance and what caused it to dip so much at the end?

Vanguard 2030 (VTHRX)
- price: $38.23
- past year performance: (-7.25%)

Vanguard 2035 (VTTHX)
- price: $23.74
- past year performance: (-7.66%)

Vanguard 2040 (VFORX)
- price: $41.88
- past year performance: (-7.43%)

Vanguard 2045 (VTIVX)
- price: $28.30
- past year performance: (-2.01%)

Vanguard 2050 (VFIFX)
- price: $46.78
- past year performance: 0.45%

Vanguard 2055 (VFFVX)
- price: $52.08
- past year performance: 3.01%

Vanguard 2060 (VTTSX)
- price: $47.91
- past year performance: 7.25%

Holding 2065 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income
Stocks 90.3 90.3 90.2 90.6 90.6 83.2 75.6 68.1 60.5 50.4 36.1 30.4
Bonds 9.7 9.7 9.8 9.4 9.4 16.8 24.4 31.9 39.5 49.6 63.9 69.6

On a side note, why is there such a difference in fund price for the 2045 and 2035 from the other target retirement funds?

Thank you!
Silk McCue
Posts: 6444
Joined: Thu Feb 25, 2016 7:11 pm

Re: Vanguard 2045 Performance - Confused

Post by Silk McCue »

Welcome to Bogleheads!

The large drop a the end of 2021 for numerous Target Date funds was due to fund distributions including dividends and capital gains that were much much larger than in recent history. Please see this sticky thread which had lots of activity recently as a result. Posts closer to the end of thread reflect the more recent occurrence. The share price drops immediately upon those distributions but if you reinvest them you now have more shares at a lower price.

viewtopic.php?f=10&t=129142

The varying share prices among the funds has nothing to do with their performance or being better or worse than one another. All that matters is how the shares you buy increase or decrease according to their holdings v

Cheers
dbr
Posts: 38867
Joined: Sun Mar 04, 2007 9:50 am

Re: Vanguard 2045 Performance - Confused

Post by dbr »

Where are you getting those performance numbers? Fund NAV changes are not the performance. Return is the performance. You can look at the list here and see the 2021 return for all the funds:

https://investor.vanguard.com/mutual-fu ... nd-returns

The 2021 performance for VTIVX for example was 16.16% reflecting the stock runup in 2021. VTSAX was 25.71% return. Return is the sum of NAV changes and distributions. For VTIVX those distributions include $3.65/share in LT capital gain distribution and 4Q dividend of $.63/share. That's around 15% right there.
sycamore
Posts: 3582
Joined: Tue May 08, 2018 12:06 pm

Re: Vanguard 2045 Performance - Confused

Post by sycamore »

Welcome to the forum ArkInfo!
ArkInfo wrote: Thu Jan 13, 2022 8:20 pm ... They should both also be comprised of the same underlying mutual funds.
You're right about that.
ArkInfo wrote: Thu Jan 13, 2022 8:20 pm According to the breakdown on the Boglehead wiki and from I could gather online, the 2045 actually has slightly higher (0.1% allocation) Total Stock Market and 2050 has slightly higher (0.1%) Total International Market allocation.
Your best bet for portfolio breakdown is the Vanguard website itself. Each fund has a "portfolio" page:
2045 - https://investor.vanguard.com/mutual-fu ... olio/VTIVX
2050 - https://investor.vanguard.com/mutual-fu ... olio/VFIFX
It's slightly out of date (11/30/2021) but likely to be more up-to-date than the wiki, which may get updated only once a year.
2045 was 86.67% stocks. 2050 was 89.60% stocks.
ArkInfo wrote: Thu Jan 13, 2022 8:20 pm (It also seems that VTSAX performed better than VTIAX.)
You're right about that, too!
ArkInfo wrote: Thu Jan 13, 2022 8:20 pm I'm hoping to learn why the variance in performance and what caused it to dip so much at the end?
The other replies indicate the correct answer - you want to compare total return, not by price alone.
ArkInfo wrote: Thu Jan 13, 2022 8:20 pm On a side note, why is there such a difference in fund price for the 2045 and 2035 from the other target retirement funds?
Fund managers (whether Vanguard or Fidelity or Schwab or whoever) get to choose the initial price/share of each fund. For whatever reason, they choose different starting values for many of the funds. So it doesn't make sense to compare fund prices and conclude that one fund is more or less expensive.

One share of 2050 (currently $46.30/sh) is not buying you the same stuff as one share of 2065 (currently $31.01/sh). But, given that both funds are about 90% stocks, 1000 dollars in each fund is giving you the same exposure to the underlying stocks & bonds, and that's what matters.
Topic Author
ArkInfo
Posts: 2
Joined: Thu Jan 13, 2022 7:46 pm

Re: Vanguard 2045 Performance - Confused

Post by ArkInfo »

Excellent information here!

Thank you all very much for taking the time to reply. (It definitely helps me understand it better and provides great resources for me to learn more.) :sharebeer
Post Reply