Vanguard changing its AA targets

[pb4uski]

We got a letter regarding Vanguard changing the allocation of international/domestic within stocks and bonds today.

Also see https://personal.vanguard.com/us/insights/article/fund-announcement-02262015

I don't recall seeing a thread or mention of this before today so I thought I would share it even though it might be old news to some.

The international equity allocation for both types of funds will increase from 30% to 40% of equity exposure, and the international fixed income allocation will rise from 20% to 30% of nominal fixed income exposure.

International exposure provides valuable diversification benefits. Vanguard evaluated a number of factors, including worldwide market cap, home bias, costs and others, in determining the right mix of U.S. and international stocks and bonds.

The overall strategic asset allocation and glide path (the rate at which the funds' allocation becomes more conservative as each fund approaches its target date) for Target Retirement Funds won't change. In addition, the expense ratios of the Target Retirement Funds, ranging from 0.16% to 0.18%, aren't expected to change. The asset allocation changes are expected to be completed by year-end.

 

[steelyman]

That's interesting, thanks for the post. I used a Vanguard Target Retirement fund as a jumping-off point in choosing funds (none Vanguard) in which to invest for an inherited IRA. The details of what I did/do are in LOL!'s market timing newsletter thread.

 

[Cat-tirement]

I also received that message last week. I have one of their target funds in my 401k.

 

[Delawaredave5]

Very interesting. Thanks !