An alternative to: Psst...Wellesley

Thats what happens when I try to do math in my head while drinking my first cup of coffee.

The distribution focus funds ER is .57.
 
Its sort of hard to say. I think by saying things like "<asset class> 0-50%" they're creating an impression that they may wildly change the holdings very quickly and the contents of the fund one day might be different from the next.

Perhaps they're overdoing the ass covering on wanting to give themselves leeway to invest as they see fit. I cant see them making rapid massive changes to the holdings. I would anticipate them to moderate change over a period of years, but if they thrash trade I think they'll lose customers. Many people wanting these funds (primarily people near or in retirement) wont be able to use them in a tax advantaged account.

Plus they oughta be able to balance some of the selling gains with losses. Some pieces of this are going to be extremely volatile. They get the ying and the yang right and trim off the ends, it might end up being reasonable.

I wouldnt expect it to be as miserly in capital gains as the Tax Managed Balanced Fund, but I dont expect it'll look like a commodity fund either.

My 60k is in a taxable fund. We'll see how it goes.
 
Moemg said:
I have about half my assests in taxable accounts . Are these investments taboo for them ?
Click to expand...

Credible hearsay, if there is such a thing, over on the Diehards board indicates that these will be very actively managed, meaning they will not be great for taxable accounts. Too much taxes on gains, dividends, etc. Do your homework beforehand.
 
Frankly, at this point I'd love to pay a lot of taxes on gains and dividends. Every year!

What Rich said is important though. Fully understand any fund before putting money into it, especially taxable funds.

That having been said, the diehards folks are a bunch of worry warts who think anything that isnt some sort of straight index thats been around for 40 year is suspicious, and I have spent a lot of time looking at these funds. Bogleheads think that a chunk of US equities, a slice of US bonds...and maybe...just maybe...a sliver of foreign equities...are all you need. Maybe that how its gone before. Maybe thats how it'll go another 40 years.

But having said that, $60k to me is like blowing a little extra money on a really nice batch of ice cream. My life doesnt depend on it. Shoot, Amazon just had a sale on chocolate and I think I bought about 40lbs worth. Oh well, Mothers Day is right around the corner.

Were I choosing between wellesley and this with safety in mind, I'd take mostly wellesley or target retirement or lifestrategy income and maybe some of this.

If I had a bunch of money and was looking at annuities and gold and commodities and market neutral funds and precious metals and thought "What the hell? Cant I get a little of all of this and not sweat the details?".

In that case I'd buy some. Whoo! Just did!
 
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Moemg said:
I have about half my assests in taxable accounts . Are these investments taboo for them ?
Click to expand...

From the prospectus:
"The Funds’ twelve scheduled distributions in each year are made monthly, at mid-month. An
additional distribution may be made in December, and other additional distributions may be
made with respect to a particular fiscal year in order to comply with applicable law. The Funds
are designed with the expectation that the twelve scheduled monthly distributions will be
paid in cash but that each additional distribution for a particular fiscal year will be automatically
reinvested in additional Fund shares. Accordingly, to allow the Funds to achieve their design
objectives, the Funds will generally automatically reinvest any additional distribution for a
particular fiscal year in additional Fund shares. These additional shares can be redeemed
under the same terms and conditions as any other shares of the Funds."

Don't pay any attention to that man behind the curtain! Indeed it appears that there may be taxable returns you either get in cash or that are re-invested beyond the percent that is paid out monthly. It will be very interesting to track these guys once they are operational.
 
Hey everyone, I didn't scour the prospectus so I might have missed something but these funds simply look like a modified fixed % withdrawal strategy. Am I wrong in thinking they just payout 3%/5%/7% of the trailing 3 year average NAV?
 
All the nervous nellies will probably crap their drawers on this one, but I am putting half my retirement account, which is in an IRA, in the 3% and 5% (50-50). I know somebody will post that they hope I don' t end up crapping my drawers in a few years.
 
I decided I like surprises and put 60k into the 3% version and 60k into the 7% version to go along with the 60k of the 5% fund I bought yesterday. I'll watch them for a while and see what the allocations turn out to be and what the short term performance looks like and maybe stuff some more money into the one I like the most.

The ER is expected to drop as assets grow. I'm doing my part! ;)
 
Wow, you sure ARE doing your part! I am a teeny bit jealous since getting in on the ground floor like this sounds like such fun (but it's not in my plan). Enjoy! And let us know what you think once things shake out. :D
 
My god folks its Vanguard, not a late night infomercial selling secrets of the wealthy.

Vanguard is "promising" growing returns starting at 3%, 5%, and ooh wait for it 7% for you Vegas gambling action junkies.


Me I'll probably put in $50K into the 5% after a muni bond matures later this year. This assumes that I still have money after my writing puts and naked calls... :)
 
Well, they're suggesting growth in the 3%, inflation pacing with the 5% and 'we're gonna try to keep up with inflation but probably wont make it' with the 7%.

I think the juicy one will be the 3% if you've got enough other income sources to fill in while it picks up some capital appreciation. But I want to see what they do with it, how they move with the markets and what the tax situation looks like at the end of the year before I throw a couple more boat anchors in.

Do also remember that we're pretty low profile income wise. My wife only works part time and since we have no debt to service every month our income needs are pretty modest. So some capital gains arent going to make me cry at tax time.

The first 60k came out of cash. The $120k for the two other purchases came out of wellesley.

This is really some nice diversification for the price. The only part I'm not thrilled with is the market neutral piece. If they get the ER down under .45 I'll be thrilled.
 
I cheated on Early Retirement and went to Boglehead 's to get their take on the funds . They seem like great funds if you are in the distribution phase but the funds they are investing with I already have so I'm not sure I see the value in changing especially since they are in my IRA which I will not be touching until required . If I did not have a cola pension I would seriously consider them because I like the security of a monthly pay out .
 
I'm in the distribution phase and will face RMD in two years. So, it seems a good fit for me as the portion in these funds will count towards that. The only problem is that do transfer the funds from my Schwab account I would have to sell all my DFA funds (a legacy from when I had a financial planner managing the portfolio). VG said they would not accept the DFA funds. I'm not sure I like doing that.
 
Fyi, my version of Vanguard site looks to be updated today (personal version). Like the new formats and also the additional informationals on the managed payout funds.
 
I wonder what percent of the distributions form one of these Vanguard funds will be capital gains and what will be taxed as income?
 
cute fuzzy bunny..did you know that your quote is from Winston Churchill also?
 
If I were lookin' for income, I'd find funds that owned a buttload of stocks like ALD (Allied Cap. Corp.), companies that have given solid dividends forever. How are these funds different from what DVY tries to do?

-CC
 
I put a maturing CD and my old position in the VG "Retirement" target fund o' funds into VPGDX (the Middle managed Payout fund with the target at 5%). For every 100 K the fund is projected to pay out @417 per month give or take. For me this is a decent way to make up a floor cash flow without worrying about laddering CDs or buying a single premium annuity, at least for the time being on my end. I have no issue with paying 50 basis points for a manged payout fund, since it will likely keep me from selling equities into a down market so long as I can keep my budget at the same level as the payouts and pensions I have coming in. I am more disapointed with excessive CEO salaries in my funds underlying equity holdings than VG's ER. (Your Mileage will vary)

Still have the same amount in Wellesly, and plan to keep a large (35%) part of my AA with Wellesly.
 
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