“Fixing” Target-Date Funds"

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Taylor Larimore
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“Fixing” Target-Date Funds"

Post by Taylor Larimore » Sat Aug 08, 2009 2:56 pm

Hi Bogleheads:

Mel Lindauer is featured on Morningstar's home page with this interesting suggestion for improving Target Retirement Funds.

“Fixing” Target-Date Funds
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Post by thenextguy » Sat Aug 08, 2009 3:32 pm

* 2050 Aggressive
* 2050 Moderate
* 2050 Conservative
I think that's a great idea. That would help people a lot even if they don't understand AA.

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Post by Opponent Process » Sat Aug 08, 2009 3:36 pm

Mel's theory is spot on, but the folks who pick aggressive funds are still going to be upset in bear markets, and those who pick conservative funds are going to be upset in bull markets. this is the crux of the problem; people want a free lunch.
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Post by Milo » Sat Aug 08, 2009 3:49 pm

I think the glide path for the TR2015 Fund is completely wrong for a TR2050 Conservative investor. A conservative 21 year old would find his allocation going from 63/37 to Target Retirement Income levels by the time they're 40. So I don't think you could use TR2015 fund for both.

I like your proposal, but it's going to necessitate a separate fund for each....ie. TR2050-10, TR2050-20, TR2050-30 (my proposal in an earlier thread on the topic) with the glide path staying consistent with a TR2050 Fund. By that I mean flat for the first 20 or so years and then ramping up the fixed allocation toward the retirement date.

In this age of computers and with the underlying funds being mostly index funds, I don't see while Vanguard and other fund companies couldn't set something like this up. The number of funds should be less important that getting someone in their appropriate asset allocation.

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Post by Mel Lindauer » Sat Aug 08, 2009 4:15 pm

Opponent Process wrote:Mel's theory is spot on, but the folks who pick aggressive funds are still going to be upset in bear markets, and those who pick conservative funds are going to be upset in bull markets. this is the crux of the problem; people want a free lunch.
Well, at least they picked "Aggressive" and "Conservative", so they basically got what they signed up for, unlike those who have no choice but were automatically all put in the same "pot".
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Post by Sonoran » Sat Aug 08, 2009 5:01 pm

It's a good idea and sounds like a great way to clarify target-date fund descriptions. I'm all for it, but at some point, investors are going to have to be responsible for doing their own due diligence and making their own decisions.

And the Senate and the SEC are both looking into various aspects of these funds

I gotta laugh at this though.. like those yahoos in the Senate are actually going to do something except give it lip service. And the SEC? Fuggedaboutit!
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Post by thenextguy » Sat Aug 08, 2009 6:04 pm

Sonoran wrote:It's a good idea and sounds like a great way to clarify target-date fund descriptions. I'm all for it, but at some point, investors are going to have to be responsible for doing their own due diligence and making their own decisions.
Well obviously, this is just a way to provide them more information to help them make their decision. I don't think anyone is suggesting that people be forced into one of these options.

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Post by Mel Lindauer » Sat Aug 08, 2009 6:04 pm

Milo wrote:I think the glide path for the TR2015 Fund is completely wrong for a TR2050 Conservative investor. A conservative 21 year old would find his allocation going from 63/37 to Target Retirement Income levels by the time they're 40. So I don't think you could use TR2015 fund for both.

I like your proposal, but it's going to necessitate a separate fund for each....ie. TR2050-10, TR2050-20, TR2050-30 (my proposal in an earlier thread on the topic) with the glide path staying consistent with a TR2050 Fund. By that I mean flat for the first 20 or so years and then ramping up the fixed allocation toward the retirement date.

In this age of computers and with the underlying funds being mostly index funds, I don't see while Vanguard and other fund companies couldn't set something like this up. The number of funds should be less important that getting someone in their appropriate asset allocation.
Hi Milo:

The devil's in the details, and I only used those as examples. And, as you point out, there should be no problem pulling this off, whether certain fund asset allocation pools serve multiple funds or not.
Best Regards - Mel | | Semper Fi

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Post by Mel Lindauer » Sat Aug 08, 2009 8:50 pm

Sonoran wrote:It's a good idea and sounds like a great way to clarify target-date fund descriptions. I'm all for it, but at some point, investors are going to have to be responsible for doing their own due diligence and making their own decisions.

And the Senate and the SEC are both looking into various aspects of these funds

I gotta laugh at this though.. like those yahoos in the Senate are actually going to do something except give it lip service. And the SEC? Fuggedaboutit!
Hi Sonoran:

Obviously, this is meant to be something to help those novice investors who know absolutely nothing at all about asset allocation, but yet have to choose a fund (or funds) for their 401k plan at their new job.

Most folks can identify how they'd rate themselves (Aggressive, Moderate or Conservative). That would at least get them invested in a fund that more closely matches their investing philosophy until they can learn more about asset allocation.
Best Regards - Mel | | Semper Fi

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Post by Sonoran » Sat Aug 08, 2009 11:47 pm

I agree with you Mel. :)
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Post by Mel Lindauer » Sun Aug 09, 2009 9:06 am

Milo wrote:I think the glide path for the TR2015 Fund is completely wrong for a TR2050 Conservative investor. A conservative 21 year old would find his allocation going from 63/37 to Target Retirement Income levels by the time they're 40. So I don't think you could use TR2015 fund for both.
One other thing I failed to mention in my previous reply to your thoughts on this particular part of your post is that no matter how conservative the "Conservative" version of a particular fund turns out to be, it's still a much better choice for a young investor than the previous old standby of a Money Market or Stable Value fund for that same investor.
Best Regards - Mel | | Semper Fi

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Post by Beagler » Sun Aug 09, 2009 12:35 pm

A fine idea, Mel.

Should there be a mechanism where investors would be dissuaded from switcing back and fort between "aggressive" and "conservative" funds based upon prevailing market conditions? e.g., anti-frequent trading?
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.

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Post by Mel Lindauer » Sun Aug 09, 2009 1:50 pm

Beagler wrote:A fine idea, Mel.

Should there be a mechanism where investors would be dissuaded from switcing back and fort between "aggressive" and "conservative" funds based upon prevailing market conditions? e.g., anti-frequent trading?
Hi Beagler:

That would be up to the individual fund companies to decide, just as it is now. As you know, Vanguard has frequent trading policies in place on a number of its funds.
Best Regards - Mel | | Semper Fi

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Post by Adrian Nenu » Sun Aug 09, 2009 2:19 pm

Here's an e-mail reply I sent Mel concerning his article:

I agree with your conclusion in the article that investors should examine the stock/bond mix rather than the date of the TD fund. But then that puts the asset allocation decision back on the investors' plates. History has shown they (most) cannot handle it right because they do not know market risk and stock market history. That was the problem that TD funds were supposed to solve - suitable asset allocation. Without sounding self-serving, I think that my rule of thumb for asset allocation based on risk tolerance would be helpful. Also the funds should be named after their stock/bond mix as well as their "retirement" dates. For example: 50/50 Target Retirement Date 2025. This immediately informs investors that the stock bond mix is 50/50 and that it will all be gradually converted to bonds/money market by 2025. Investors still have to have some knowledge of market risk though to pick the TD fund with the suitable asset allocation, unless a 50% equity cap is placed on all TD funds to prevent investors from taking on too much risk. This imposed diversification and risk limit may seem draconian but I think that Graham, Markowitz, Peter Bernstein, Mandelbrot, etc would probably agree given the circumstances. It seems to me that there has to be some system in place to prevent investors from self-destruction by taking on too much risk.

The TD fund managers mislead investors because the managers themselves underestimated equity risk. In normal economic times nothing would have happened because everything is going up. AA and risk management mistakes are covered up. Like Buffett says: "you only find out who has been swimming naked when the tide goes out". Unfortunately, bear markets are more common than most people think and we had two bad ones in the last 10 years. This means equity risk was/is higher than most people think, including TD fund managers. Anyway, that's what Mandelbrot's book is about. BTW, Benoit Mandelbrot was Nassim Taleb's and Eugene Fama's instructor in business school.

Regards, Adrian
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Post by Oicuryy » Sun Aug 09, 2009 2:25 pm

"A rose by any other name ..."

So the 2020 fund would be renamed the 2020 Moderate fund. That same fund would also be named the 2010 Aggressive fund and the 2030 Conservative fund. I guess having three names on each fund might help people find the right one.

Ron
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Post by Mel Lindauer » Sun Aug 09, 2009 3:00 pm

Oicuryy wrote:"A rose by any other name ..."

So the 2020 fund would be renamed the 2020 Moderate fund. That same fund would also be named the 2010 Aggressive fund and the 2030 Conservative fund. I guess having three names on each fund might help people find the right one.

Ron
Hi Ron:

Since most investors are going to focus on the date in the fund's name, at least they could choose whether they wanted to be Aggressive, Moderate, or Conservative for that date. Then, their choice would automatically guide them to the underlying asset allocation that may be more suitable for them, based on their choice, since, as we know, "one size doesn't fit all".
Best Regards - Mel | | Semper Fi

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Post by Triple digit golfer » Sun Aug 09, 2009 4:44 pm

Mel, great article, but I think it's silly that we should have to baby investors by having several names for basically the same fund.

Why not just have five funds (or however many there are in total) and call them something like:

Target Retirement - Risk Level 1
Target Retirement - Risk Level 2
Target Retirement - Risk Level 3
Target Retirement - Risk Level 4
Target Retirement - Risk Level 5

where 1 has the least equities and 5 has the most. Just like Vanguard rates their own individual funds now.

I think we have to get away from the dates in the name, because then no matter what, people will have a qualm.

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Post by Mel Lindauer » Sun Aug 09, 2009 5:20 pm

Triple digit golfer wrote:Mel, great article, but I think it's silly that we should have to baby investors by having several names for basically the same fund.

Why not just have five funds (or however many there are in total) and call them something like:

Target Retirement - Risk Level 1
Target Retirement - Risk Level 2
Target Retirement - Risk Level 3
Target Retirement - Risk Level 4
Target Retirement - Risk Level 5

where 1 has the least equities and 5 has the most. Just like Vanguard rates their own individual funds now.

I think we have to get away from the dates in the name, because then no matter what, people will have a qualm.
Hi TDG:

My idea was simply meant to get people talking about possible solutions. The name(s) of the funds really don't matter to me. I'd be in favor of any naming system that helped uninformed investors who didn't know about or understand asset allocation select the most appropriate fund for their 401k.

Keep the ideas coming. Perhaps someone just might be listening!
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Post by Triple digit golfer » Sun Aug 09, 2009 5:27 pm

Here's another idea, kind of relating to Adrian's:

Just call the fund "Target Retirement 50/50" or "Target Retirement 75/25" or whatever it may be. Have one for every increment of 5. When people wish to become more conservative, they just exchange one for another.

I think the important thing is to keep away from dates. Dates mislead people. They have this misconception that the once their date comes, all is rosy.

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Post by Mel Lindauer » Sun Aug 09, 2009 5:40 pm

Triple digit golfer wrote:Here's another idea, kind of relating to Adrian's:

Just call the fund "Target Retirement 50/50" or "Target Retirement 75/25" or whatever it may be. Have one for every increment of 5. When people wish to become more conservative, they just exchange one for another.

I think the important thing is to keep away from dates. Dates mislead people. They have this misconception that the once their date comes, all is rosy.
Hi Again TDG:

The problem with that approach is that the funds then become very similar to the LifeStrategy funds, which don't have an automatic glide path that helps the investor get more conservative as they age. Remember, the original goal of the TR funds was to provide a nicely-diversified portfolio that ran on autopilot when it came to rebalancing and getting more conservative over time.
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Post by Adrian Nenu » Sun Aug 09, 2009 6:06 pm

The TR fund managers took on too much risk and the bear market showed up. Not just any bear market either. The simplest solution to the problem is to make all TR funds less risky by reducing equity exposure and increasing the bond allocation.

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Post by Triple digit golfer » Sun Aug 09, 2009 6:27 pm

Mel Lindauer wrote:
Triple digit golfer wrote:Here's another idea, kind of relating to Adrian's:

Just call the fund "Target Retirement 50/50" or "Target Retirement 75/25" or whatever it may be. Have one for every increment of 5. When people wish to become more conservative, they just exchange one for another.

I think the important thing is to keep away from dates. Dates mislead people. They have this misconception that the once their date comes, all is rosy.
Hi Again TDG:

The problem with that approach is that the funds then become very similar to the LifeStrategy funds, which don't have an automatic glide path that helps the investor get more conservative as they age. Remember, the original goal of the TR funds was to provide a nicely-diversified portfolio that ran on autopilot when it came to rebalancing and getting more conservative over time.
Yes, I thought of that. So, that's probably not the best idea.

Really, I don't think there's a one-size-fits-all solution. Actually, I don't think there's really a problem, other than investor irresponsibility, or investor ignorance. I think people need to use common sense and READ before they invest in anything. Understand that they could lose money. Understand that Fund X may be ideal for you but not for me.

I think the best idea is just to have about five or ten different funds, from conservative to aggressive. The tough part is finding a name for them.

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Post by Opponent Process » Sun Aug 09, 2009 6:39 pm

I also think the dates are a very bad idea. I know some people who think TR2030 means: I can retire from my job in 2030 and I'm set for life (irrespective of contribution amounts, market performance, or total portfolio value). I've even had to try to mediate an argument where one person was castigating the other for picking 2030 and not an earlier date ("Why would you keep working until 2030 when you could retire earlier? Look they have earlier dates available!").
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Post by Chas » Sun Aug 09, 2009 7:19 pm

thenextguy wrote:
* 2050 Aggressive
* 2050 Moderate
* 2050 Conservative
I think that's a great idea. That would help people a lot even if they don't understand AA.
My brother and his wife are a product of the late 40's. To them, anything that wasn't FDIC insured was beyond the pale. Stock, or even bonds, were just for reckless fools, soon to be parted from their money. Thing is, I'm not so sure they weren't right. They've done quite well. I'll never hear the end of their really big winner, which was a 10 year CD paying 12% interest they bought in the late 70's. :)
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Post by Mel Lindauer » Sun Aug 09, 2009 7:20 pm

I think the primary problem stems from investor ignorance. How many young investors do you know who actually take the time to learn about asset allocation, risk, retirement needs, etc. However, these same naive and uninformed investors have to decide which fund or funds to invest their 401k or other retirement plan money in.

My observation is certainly not scientific, and the folks on this forum are not typical, but it seems to me that many investors don't get serious about investing until they're around the big 5 0. So for years, they may have been sitting in a money market or stable market fund, or in a way too aggressive TR fund. I'm simply trying to start a dialog to get folks thinking about a solution to the problem. And I'm not suggesting that my offering is either the best or only way to arrive at a workable solution.
Best Regards - Mel | | Semper Fi

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Post by Dead Man Walking » Mon Aug 10, 2009 4:54 am

Mel,

You certainly have started the discussion with sound ideas. Any target fund will have asset allocation problems. For example, in addition to a stock/bond allocation, many posters here would have debates over the equity allocation. How much should be devoted to international equities? How much to small caps? How much to value? Should the bonds be short-term, intermediate term, TIPS, long-term, corporate or treasuries? Good grief the arguments would be endless!

Regards,

DMW

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Mel:

Post by Barry Barnitz » Mon Aug 10, 2009 10:41 am

This division of risk based allocations is often utilized in state 529 programs:

Vanguard 529 programs


Nevada
North Carolina
Ohio
Utah

Representative TIAA-CREF 529 program

Michigan


regards,
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Re: Mel:

Post by Mel Lindauer » Mon Aug 10, 2009 10:51 am

Barry Barnitz wrote:This division of risk based allocations is often utilized in state 529 programs:

Vanguard 529 programs


Nevada
North Carolina
Ohio
Utah

Representative TIAA-CREF 529 program

Michigan


regards,
Thanks, Barry, for posting those examples of existing Vanguard funds. That's precisely what I recommended as one possible solution for the TR funds, so that shows it's certainly workable and manageable from the fund company's standpoint.
Best Regards - Mel | | Semper Fi

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Post by mikep » Mon Aug 10, 2009 2:46 pm

I would like a make-your-own-cafeteria style target fund. I could assemble from a menu of whatever funds I want from vanguard, program a glide path and rebalancing bands for a lifetime and I could set/forget it. I choose my own TSM, bonds, small value, international allocations. Then I have no need to see if REIT is over my 25% rebalance band, since in the TR fund I created I programmed a rebalance band and it's already readjusted its allocation if the rebalancing band is exceeded. I would also like to severly restrict my ability to make future changes once the TR fund is setup - ie. by mail only, disable online access, a 6 month waiting period before any allocations are changed, and I would need a life event type excuse to make any changes. In fact, it would be better off if I could not access the fund NAV, account balance, Vanguard webpage, Wall street news or any other information. I just tell Vanguard how much to transfer from my savings account to my own custom target fund.

Most people would probably have higher returns that way, the initial allocation can be decided in a meeting with Vanguard's CFP's and then locked in.

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Post by Jack » Mon Aug 10, 2009 6:41 pm

I see Mel's proposal as really a solution to the wrong problem. The wrong problem is that investors are not offered enough choices. The real problem is that mutual fund companies are pressured by marketing departments to create overly aggressive target retirement funds in a competitive race to the bottom.

The solution is not to make investing more complicated by adding a lot of new flavors (conservative, moderate, aggressive). The solution is just to ignore marketing and do what is right. That is, all target retirement funds should be conservative.

For those desiring a more aggressive portfolio, they should do it themselves. If they don't have the knowledge to manage their own three-fund portfolio, they have no business being more aggressive. They really don't understand the implications or the risks. Offering aggressive target retirement funds is just an invitation to steer unsophisticated investors into a risky portfolio. ("Higher expected returns" -- hey, that's for me!)
Mel wrote:Even if they don't understand asset allocation, most investors can at least describe themselves as "Aggressive," "Moderate," or "Conservative."
I think that is a fallacy. Most people really can't objectively make that evaluation. Even the relatively sophisticated investors on this forum have problems making that judgment.

Target retirements funds should be very simple and conservative. Fund managers need to be able to resist the pressure of the marketers to pump up returns by taking excessive risks. Isn't that one of the most important reasons why people hire money managers, anyway?

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Post by Adrian Nenu » Mon Aug 10, 2009 6:50 pm

Cap equity at 50% as a mechanism to protect investors from themselves.

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Post by Mel Lindauer » Mon Aug 10, 2009 7:16 pm

Jack wrote:I see Mel's proposal as really a solution to the wrong problem. The wrong problem is that investors are not offered enough choices. The real problem is that mutual fund companies are pressured by marketing departments to create overly aggressive target retirement funds in a competitive race to the bottom.

The solution is not to make investing more complicated by adding a lot of new flavors (conservative, moderate, aggressive). The solution is just to ignore marketing and do what is right. That is, all target retirement funds should be conservative.

For those desiring a more aggressive portfolio, they should do it themselves. If they don't have the knowledge to manage their own three-fund portfolio, they have no business being more aggressive. They really don't understand the implications or the risks. Offering aggressive target retirement funds is just an invitation to steer unsophisticated investors into a risky portfolio. ("Higher expected returns" -- hey, that's for me!)
Mel wrote:Even if they don't understand asset allocation, most investors can at least describe themselves as "Aggressive," "Moderate," or "Conservative."
I think that is a fallacy. Most people really can't objectively make that evaluation. Even the relatively sophisticated investors on this forum have problems making that judgment.

Target retirements funds should be very simple and conservative. Fund managers need to be able to resist the pressure of the marketers to pump up returns by taking excessive risks. Isn't that one of the most important reasons why people hire money managers, anyway?
Hi Jack:

While your suggestions could be one answer in an ideal world, we have to deal with the real world where fund companies create overly-aggressive Target Date funds so they'll look good in bull markets in hopes of outperforming their competition. One need only look at the changes Vanguard (of all companies) made to their TR funds a while back to become more competitive.

We simply have to deal with reality, not some pipe dream that you and I know would be the better choice but that isn't gonna happen..
Best Regards - Mel | | Semper Fi

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Post by elgob.bogle » Mon Aug 10, 2009 7:39 pm

Adrain said: "Cap equity at 50% as a mechanism to protect investors from themselves."

I agree. The rest could be worked out from this 50% max limit.

Best regards,

elgob

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Post by Jack » Mon Aug 10, 2009 7:43 pm

Mel Lindauer wrote:While your suggestions could be one answer in an ideal world, we have to deal with the real world where fund companies create overly-aggressive Target Date funds so they'll look good in bull markets in hopes of outperforming their competition. One need only look at the changes Vanguard (of all companies) made to their TR funds a while back to become more competitive.

We simply have to deal with reality, not some pipe dream that you and I know would be the better choice but that isn't gonna happen..
If even Vanguard fund managers don't have the guts to stand up to the pressure of the marketers, what chance do the investors have resisting aggressive vs. conservative? What ever happened to doing what is right for the investor, in the spirit of Bogle? How is Vanguard any different than Janus?
Last edited by Jack on Mon Aug 10, 2009 8:05 pm, edited 1 time in total.

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Post by stratton » Mon Aug 10, 2009 7:49 pm

The middling version Mel mentioned should be required to be a duplicate of the TSP's target date type funds right down to the same indexes. They have to offer this before any customized versions. I'm not saying anything about the ER..., but it does give a consistant basis for shopping which a lot of fund companies would HATE.

Today's M* Fundspy column: Frugality Pays with Target-Date Funds
We ended up with a target-date universe of 34 families, all of which have at least 18 months of performance history. The differences in expenses are most notable at the extremes. The Vanguard Target Retirement Series, with an overall expense ratio of just 0.19%, is 80% lower than the industry average of 0.90%. The Vanguard target-date funds, built on a foundation of its low-cost index funds, are much less expensive than even the next closest index funds from Nationwide (0.65%) and Wells Fargo (0.67%), whose fund expenses do rank favorably compared with the target-date universe as a whole. While passive structures generally correspond with lower costs, there are some exceptions. The Seligman TargetHorizon ETF series, for example, is one of the most expensive target-date series (with a 1.20% average), indexed or actively managed, even though the series' underlying ETFs have low expense ratios.
There's a list of target-date fund familys with ERs. After Vanguard the least expensive is 0.46% higher in ER.

Paul

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Post by Babakhani » Mon Aug 10, 2009 7:52 pm

What if instead of calling it a target retirement fund, calling it by the age of the investor that changes as the person ages?

Example

Adjustable fund for a 30 year old (the name could be catchier)
- conservative 67/33
- aggressive 73/27

and it would change as the person ages every 5 years

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Post by jeffyscott » Tue Aug 11, 2009 8:15 am

Jack wrote:The real problem is that mutual fund companies are pressured by marketing departments to create overly aggressive target retirement funds in a competitive race to the bottom.

That is, all target retirement funds should be conservative.

For those desiring a more aggressive portfolio, they should do it themselves.

:thumbsup

I don't know if the maximum equity in any of them should be 50%, but it certainly should not be 90% for any of them. The idea that the least sophisticated investors ought to be at 90% equities until age 40 demonstrates far too much faith in equities and in these investor's ability to "stay the course" through extreme market declines.
Time is your friend; impulse is your enemy. - John C. Bogle

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Opponent Process
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Post by Opponent Process » Tue Aug 11, 2009 8:34 am

there's just no way you can make this a perfect system (although we should try, I really do hope the fund shops are having the same discussion we are here). but just like in sports where "winning solves everything", I think this whole thing will blow over in the next bull market.
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Mel Lindauer
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Post by Mel Lindauer » Tue Aug 11, 2009 3:10 pm

Opponent Process wrote:there's just no way you can make this a perfect system (although we should try, I really do hope the fund shops are having the same discussion we are here). but just like in sports where "winning solves everything", I think this whole thing will blow over in the next bull market.
Sad to say it, but I suspect that you're right, OP.
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Jack
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Post by Jack » Tue Aug 11, 2009 10:24 pm

Opponent Process wrote:I think this whole thing will blow over in the next bull market.
Except that bull markets are at the root of the problem. During a bull market the most aggressive target retirement funds win so all fund providers have incentives to juice their returns by taking on more equity risk. This is exactly what Vanguard did to their funds when they redesigned them to have more equities a few years back.

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jeffyscott
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Post by jeffyscott » Wed Aug 12, 2009 7:26 am

March 20, 2006:
The existing funds' current asset allocation path will now provide increased exposure to equities over a longer period of time. The result will be a larger equity allocation of roughly 10 to 20 percentage points, depending on the fund. For example, the Target Retirement 2035 Fund will change its equity allocation to 90% from its current 75%, according to Vanguard.
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Time is your friend; impulse is your enemy. - John C. Bogle

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Adrian Nenu
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Post by Adrian Nenu » Wed Aug 12, 2009 7:37 am

Opponent Process wrote:
there's just no way you can make this a perfect system (although we should try, I really do hope the fund shops are having the same discussion we are here). but just like in sports where "winning solves everything", I think this whole thing will blow over in the next bull market.


Sad to say it, but I suspect that you're right, OP.
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Best Regards - Mel
Well said. Even if Vanguard TR funds are made "fool proof" through some method, there is no way to control what happens outside the TR funds. I think the underlying problem can be fixed by reducing the TR funds' equity allocations.

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jeffyscott
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Post by jeffyscott » Wed Aug 12, 2009 8:30 am

Adrian Nenu wrote: I think the underlying problem can be fixed by reducing the TR funds' equity allocations.
That won't happen because they would then have to admit that it was a poorly considered and ill-timed decision to boost equity allocations about 3 years ago (in the last 3 years stocks are down a total of about 15%, based on VTSMX and bonds up about 20%, based on VBMFX).
Time is your friend; impulse is your enemy. - John C. Bogle

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