Does Vanguard Offer Automatic Rebalancing

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dbforbes
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Does Vanguard Offer Automatic Rebalancing

Post by dbforbes » Wed Apr 17, 2019 8:52 am

Good morning, All! In reviewing Vanguard's website, I see no option for automatic rebalancing. For example, in my employer's 401(k) administered by The Standard, I have elected the option to have my funds automatically rebalance to my preferred percentage allocation every 6 months. I see nothing equivalent on the Vanguard website. While I have no problem going in an rebalancing on my own, my wife, who maintains her finances separately, is planning on allocating her entire rollover IRA to a Target Date fund simply to avoid the hassle of keeping track (her words). I am hoping to find her a way to simply set a 3-fund portfolio with an automatic rebalancing. Anybody know how I can accomplish this? Thanks in advance for your attention and any assistance you can provide!

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RickBoglehead
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by RickBoglehead » Wed Apr 17, 2019 8:57 am

Pay 0.3% for Vanguard's Personal Advisory Service (PAS), or use a Target Date fund.
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Traveller
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by Traveller » Wed Apr 17, 2019 9:14 am

Just my opinion, but a target date fund sounds perfect for your wife. Why do you feel a three fund is better? The target date fund easentially is a self balancing 3 fund portfolio that shifts it's asset allocation more conservative as one ages.

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goingup
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by goingup » Wed Apr 17, 2019 9:16 am

She has a good plan. A Target Fund is self-balancing.

There is no automatic balancing function for a collection of Vanguard funds at the retail site. You can keep an eye on your allocation using the Portfolio Watch tool. In my opinion, rebalancing isn't too important and can be done rarely when stocks/bonds are 5-10% out of alignment.

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Re: Does Vanguard Offer Autmatic Rebalancing

Post by RadAudit » Wed Apr 17, 2019 9:21 am

dbforbes wrote:
Wed Apr 17, 2019 8:52 am
my wife, who maintains her finances separately, is planning on allocating her entire rollover IRA to a Target Date fund simply to avoid the hassle of keeping track (her words). I am hoping to find her a way to simply set a 3-fund portfolio with an automatic rebalancing.
In addition to target date funds, she may wish to look at VG Life Strategy (target risk) funds. Pretty good option for maintaining a constant AA. Rebalancing is done by VG. Now, they are four fund portfolios vs. three fund; but, it doesn't seem to make a huge difference.
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dbforbes
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by dbforbes » Wed Apr 17, 2019 10:34 am

Traveller wrote:
Wed Apr 17, 2019 9:14 am
Just my opinion, but a target date fund sounds perfect for your wife. Why do you feel a three fund is better? The target date fund easentially is a self balancing 3 fund portfolio that shifts it's asset allocation more conservative as one ages.
RadAudit wrote:
Wed Apr 17, 2019 9:21 am
she may wish to look at VG Life Strategy (target risk) funds
Was just thinking of the extra (give or take) .1% for fees for Target Date and Life Strategy funds when compared with the basics. I know it is not much, but it adds up. Thanks!

onourway
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by onourway » Wed Apr 17, 2019 10:53 am

dbforbes wrote:
Wed Apr 17, 2019 10:34 am
Was just thinking of the extra (give or take) .1% for fees for Target Date and Life Strategy funds when compared with the basics. I know it is not much, but it adds up. Thanks!
Many people object to this additional amount when they become aware of low-cost investing and in a perfect world, you're right - that cost would add up. However we are not perfect automatons, and in reality, managing a 3-fund portfolio or similar means making a lot of decisions where we have the opportunity to make behavioral errors. There is the urge to tinker, to change something, and there is the even more difficult task of sometimes re-balancing in difficult markets. This will typically mean selling your assets that have performed best recently in order to buy assets that nobody else wants right now. This can be very difficult to do - even if it is automatic.

Given that, for most investors, a Target date or other target risk fund is likely to offer less temptation to tinker and automatic re-balancing at a very reasonable cost.

livesoft
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by livesoft » Wed Apr 17, 2019 11:41 am

Does the automated rebalancing in the OP's 401(k) cost any extra in [possibly hidden] fees or higher expense ratios? Perhaps the employer pays for that option?
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mervinj7
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by mervinj7 » Wed Apr 17, 2019 2:25 pm

livesoft wrote:
Wed Apr 17, 2019 11:41 am
Does the automated rebalancing in the OP's 401(k) cost any extra in [possibly hidden] fees or higher expense ratios? Perhaps the employer pays for that option?
The two MegaCorps I have worked for both offered rebalancing alerts followed by one click rebalancing. The fees were extremely low for the Vanguard index funds offered in the Fidelity administered 401ks but perhaps the costs of adding the tool is amortized by the relatively large number of employees.

zlandar
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Re: Does Vanguard Offer Automatic Rebalancing

Post by zlandar » Wed Apr 17, 2019 2:41 pm

I don’t believe so. I use the portfolio watch tool in Vanguard to link all my brokerage and retirement accounts and rebalance them myself once a year.

If you have a brokerage account you will end up having to do it yourself as you want to keep bonds in tax-deferred accounts. If all you have are tax-deferred accounts target funds in all of them would be an easy pick.

RonSwanson1776
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by RonSwanson1776 » Wed Apr 17, 2019 7:08 pm

dbforbes wrote:
Wed Apr 17, 2019 10:34 am
Traveller wrote:
Wed Apr 17, 2019 9:14 am
Just my opinion, but a target date fund sounds perfect for your wife. Why do you feel a three fund is better? The target date fund easentially is a self balancing 3 fund portfolio that shifts it's asset allocation more conservative as one ages.
RadAudit wrote:
Wed Apr 17, 2019 9:21 am
she may wish to look at VG Life Strategy (target risk) funds
Was just thinking of the extra (give or take) .1% for fees for Target Date and Life Strategy funds when compared with the basics. I know it is not much, but it adds up. Thanks!
Just want to clarify, there is no extra .1% with the funds you've outlined. The expense ratios of these funds (td and life strategy) reflect the weighted average expense of the underlying funds.

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friar1610
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Re: Does Vanguard Offer Automatic Rebalancing

Post by friar1610 » Wed Apr 17, 2019 8:14 pm

It's interesting that automatic rebalancing is available with Vanguard Variable Annuities but not with mutual fund/brokerage accounts.
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HawkeyePierce
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Re: Does Vanguard Offer Automatic Rebalancing

Post by HawkeyePierce » Wed Apr 17, 2019 8:59 pm

Vanguard offers one-click rebalancing in their 401k plans.

Perhaps they'll roll it out for individual investors someday.

Topic Author
dbforbes
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Re: Does Vanguard Offer Autmatic Rebalancing

Post by dbforbes » Thu Apr 18, 2019 6:27 am

livesoft wrote:
Wed Apr 17, 2019 11:41 am
Does the automated rebalancing in the OP's 401(k) cost any extra in [possibly hidden] fees or higher expense ratios? Perhaps the employer pays for that option?
Just took the following from The Standard's website:

If you have selected an investment option that contains short-term redemption fees, please note that when you have Automatic Rebalancer turned on, short-term redemptions fees may apply. This would apply only to shares that have been held less than the required holding period for that particular investment option and would need to be liquidated to bring your overall balance in alignment with the directions you gave for future contributions. After the designated minimum holding period for an investment in a fund has elapsed, investors are not charged for redeeming shares of the investment. If incurred, redemption fees do not go to the Investment Company or The Standard, but are credited to the fund's assets.

To review if you have an investment option that contains short-term shares, go to the Performance page and click the more information more info icon behind the name of the investment option.

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