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Vanguard Asset Allocation Fund
Old 05-06-2005, 07:35 PM   #1
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Vanguard Asset Allocation Fund

As of 3/31/05, their quant model has them 100% stocks.

Why?

Supposedly they split between stocks/bonds/cash according to their 'proprietary dividend discount model'.

Hard over 100% stocks is pretty extreme. Duh? Anyone care to speculate what they think they know that we don't?
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Re: Vanguard Asset Allocation Fund
Old 05-06-2005, 08:04 PM   #2
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Re: Vanguard Asset Allocation Fund

Its been that way for a while too.

It was a good idea last year when stocks were on a run. Considering the crappy total returns for short and intermediate bonds maybe they're just betting on the least stinky horse?

They do have the option to go into cash.
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Re: Vanguard Asset Allocation Fund
Old 05-07-2005, 02:25 AM   #3
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Re: Vanguard Asset Allocation Fund

Quote:
... maybe they're just betting on the least stinky horse?...
That would be my guess. Similar to the fed model, which is wildly bullish now because S&P earnings yield is higher than the 10 year bond yield.
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Re: Vanguard Asset Allocation Fund
Old 05-07-2005, 07:47 PM   #4
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Re: Vanguard Asset Allocation Fund

The Vanguard Balanced fund VAAPX is my Roth IRA. I tend to agree with their assessments. One reason they may be all stock is their investment plan calls for stock VS long term treasuries and the like, not just any bond. It may be that some balanced fund would hold short or intermediate bonds at this time but since VAAPX does not plan to hold those then I assume they feel stocks are better than long term bonds.
Anyway, I do tend to like this fund and I am not inclined to move my Roth from it. But I do have other indexed funds, a few DRIPs and an expected pension so its just part of my plan. (Or what looks like a plan in that various somewhat divergent things are held and collected over time, and I can present this as a plan.)
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