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Vanguard Market Neutral Fund
Old 09-26-2016, 05:21 PM   #1
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Vanguard Market Neutral Fund

Is anyone out there using this fund? If so, what say you? Considering it as a bond fund substitute.

This fund has a unique and complex investment approach, compared with other Vanguard funds. Its goal is to “neutralize,” or limit, the effect of stock market movement on returns. Because of this, the fund’s return is often uncorrelated to that of the stock market. Unlike other Vanguard funds, this fund uses long- and short-selling strategies, which involve specific risks not apparent in traditional mutual funds. The fund may be appropriate for a small portion of an already well-diversified portfolio.
Of course with a $250,000 minimum if it is to be a "small portion of an already well-diversified portfolio" then it would have to be a pretty big portfolio!

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Old 09-26-2016, 05:41 PM   #2
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This fund has a unique and complex investment approach
They lost me at this point.

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Old 09-26-2016, 10:58 PM   #3
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IMO Vanguard has gone somewhat off the rails since Bogle stepped down.
And if I claim to be a wise man, it surely means that I don't know.
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Old 09-27-2016, 02:12 AM   #4
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I use it as a portion of my portfolio; however, I primarily use the Managed Payout (VPGDX) fund in my taxable investments. Hence part of the portfolio.

It is a stock based fund, but produces returns similar to bonds. There is a lot of hate and discontent surrounding it. I think it is a nice part of the overall Managed Payout fund, as its price is relatively stable, while producing some returns.

As far as using it on your own. I would not recommend it, unless you have a massive amount invested elsewhere and are looking to somehow diversify. Hope this helps.

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Old 09-27-2016, 06:35 AM   #5
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It's in the portfolio of the Vanguard Managed Payout Fund, which sunk like everything else in 08/09 and has been lackluster since. Like a lot of market strategies, it makes sense on paper.
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Old 09-28-2016, 04:02 PM   #6
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Originally Posted by Onward View Post
IMO Vanguard has gone somewhat off the rails since Bogle stepped down.
That may well be. A while back I received a letter from them about a free consultation, so I called. It turned out to be they wanted me to subscribe to a "management group" (I think that's what he called it.) that would manage my funds. For a 1% fee. He goes on to say that in general they do better than 2% or more than people can do by themselves. Knowing the answer, I ask "Is that guaranteed?" Well, no.

Finding this very difficult to believe since it is contrary to everything I've read on investing I declined the offer.
I heard the call to do nothing. So I answered it.
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Old 09-28-2016, 04:41 PM   #7
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I had a fund like this from Guggenheim. It ultimately underperformed and was very expensive. I dropped it.

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