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Re: Financial Engines through Vanguard
Old 01-18-2006, 05:29 PM   #21
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Re: Financial Engines through Vanguard

I am only guessing... FE selects funds based on statistical factors such as fund cost, beta, standard deviation and market sector. If FE can't pin those elements down it shouldn't be on their list unless you include the fund on your list and tell it not to substitute. They could appropriately include a country specific fund if they could determine that it behaves like a fund on which they have data. I would love to know how FE would handle Matthews India fund, for example. I don't think the India stock market has the same StD as Russia, the fund is relatively new so I doubt if they have a beta on it against a developing countries index (or an India index if there is such a thing).
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Re: Financial Engines through Vanguard
Old 01-20-2006, 10:21 PM   #22
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Re: Financial Engines through Vanguard

I've played with FE multiple times through Vanguard over
the past few years, but have never wanted to actually
implement its suggestions.* I doubt I could hire a person
who's suggestions I would like either.*

I think its biggest weakness is that it tends to prefer
recent winners, especially if you ask it to max out
the risk/reward.* So when I was first using it, it
always wanted me to have more S&P 500 index, which
had been the "winner" over the past 5 years or so.

When I ran it a few weeks ago, it was in love with
the Mid-Cap index.* For example it wanted me to sell my
Extended Market index (5 year return 6.93%, 3554 stocks,
median market cap $2.5 Billion)* to buy the Mid-Cap index
(5 year return 9.34%, 451 stocks with a median market
cap of $6.1 Billion).* Personally, I'm more comfortable
with 3554 stocks than with 451, and hate chasing recent
performance.* So that was one suggestion I did not seriously
consider.

Despite my frustrations with it, I will still use it occasionally
to see how much it thinks it can improve my portfolio,
what it thinks would improve it, and to let it give me
yet another opinion on how I am doing.* Most importantly,
if it says you do not have enough money to meet your
goal, you should definitely investigate further before retiring!

I too am very disgusted that it does not understand
treasuries.*

It has retained my "plan" and account data for years.

-Bill
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