Vanguard Target Retirement Fund (VTINX)

[ejman]

Wow, down 16.33% today. I've never seen such a drop in an index balanced fund when the underlying index funds have not had anywhere near such drops. If anybody knows what happened please share.

 

[FANOFJESUS]

It happened in the LifeStrategy to. That is odd. I am guessing a mistake on the screen not in your fund.

 

[RunningBum]

A reporting glitch? Yahoo is showing it down a penny, .08%. https://finance.yahoo.com/quote/VTINX/
VG is reporting a few funds way down that don't match Yahoo.

 

[ejman]

A reporting glitch? Yahoo is showing it down a penny, .08%. https://finance.yahoo.com/quote/VTINX/
VG is reporting a few funds way down that don't match Yahoo.

Interesting, Vanguard and Yahoo don't match. Maybe it's all monopoly money and our funds don't really exist

 

[OldShooter]

There is an easy solution to problems like this: Only look once every year or two.

 

[ejman]

There is an easy solution to problems like this: Only look once every year or two.

I suppose but what if TODAY happens to be the day you look after not looking at it since 2016

 

[ejman]

Okay now the Vanguard website matches with Yahoo and today's drop was $.01 or .08%. Sorry for the interruption - back to your regular programing. (do wonder what happened though)

 

[RunningBum]

Inexcusable that VG would be showing the wrong prices, for hours apparently.

 

[MRG]

Inexcusable that VG would be showing the wrong prices, for hours apparently.

They can't just type the price in?

There's a lot that goes on when an error like that occurs. Glad I'm retired. [emoji111]

 

[gauss]

Whew -- Starting to wish that I did not see this thread after the first couple of messages. Most of our funds are in Vanguard Target Retirement 20xx.

Sounds like at the end it has been corrected.

Dare I log into the Vanguard site?
Naw.. I don't want to see the results of last week yet.

 

[target2019]

Numbers reported through Google Finance for VFINX are off.

Year-to-date as of 10/15/2018 on Vanguard site is 4.33%

=GOOGLEFINANCE("VFINX", "returnytd")/100 results in 10.44%

 

[ejman]

I contacted my flagship representative requesting an explanation. Haven't heard back yet.

 

[gauss]

I am really hoping that 15% of the underlying assets have not gone "missing" and that the glitch was the computers automatically reflecting the remaining NAV.

 

[mountainsoft]

I have noticed that Vanguard seems to take a few hours after the markets close before the numbers update and stabilize. Sometimes they fluctuate multiple times in the evening before finally settling on a value for the day. I have no idea why.

 

[MRG]

I have noticed that Vanguard seems to take a few hours after the markets close before the numbers update and stabilize. Sometimes they fluctuate multiple times in the evening before finally settling on a value for the day. I have no idea why.

It's normally from pricing issues. Market close is a busy time with lots of moving pieces. If anything can go wrong it does then. I've seen some pretty bizarre systems issues, that only happened during that critical time.

 

[OldShooter]

I suppose but what if TODAY happens to be the day you look after not looking at it since 2016

Fair question.

Let's suppose that there is a computer glitch like this once a year, once in about 200 trading days and that it is randomly distributed. That probably overestimates the risk but it makes the numbers easy.

In that case, you have a 0.5% chance, one in two hundred, of picking that day for your annual check of the stock or fund price. If you are unlucky enough to pick the day of that computer glitch, you do what the OP did here, try to sanity check it. But you have a very low probability of encountering that hassle.

OTOH, if you are checking every day, you have a 100% chance of seeing the computer glitch and having to hassle around to sanity check it. Guaranteed hassle, IOW.

But the important point is this: The price series of any reasonably diversified portfolio is a random walk with a tiny upward bias. Take a hypothetical broad equity fund (like the equity component of VTINX) that is priced around $100. An optimist might hope for an upward bias over time of 8%, or $8.00. That is 4 cents per trading day. There is no way that a bias of 4 cents per day can be discerned by studying the trading noise that is the daily price. Even one year is really too short.

Five years, ten years, or longer are the periods over which the total return of this fund can maybe be fairly evaluated. People just don't want to wait that long. I'm guilty of this. I benchmark portfolios managed for a couple of nonprofits. My rule with them is to wait and accumulate two years of actual data (not backtests) before making any kind of judgment comparing the portfolios to their benchmarks. Statistically valid? Probably not.

But looking at daily prices is a complete waste of time.

 

[ejman]

Well, here is the answer as to the pricing glitch from my Vanguard flagship representative "You are correct. I was out of the office yesterday and was unaware that there was a different price listed on our website. I apologize for the inconvenience. Vanguard inadvertently posted a preliminary price on our website for Vanguard Target Retirement Income Fund (VTINX) on Monday, October 15, 2018. However, the final price for VTINX was listed on our website at approximately 8:30 p.m., Eastern time. I hope this information is helpful. Please let me know if you have any additional questions or concerns."

Oh well, I would have been really surprised if I'd gotten a detailed answer as to what really went wrong.
At least I'm getting a prompt response from Vanguard which I understand may be sometimes lacking.

 

[ejman]

Fair question.

Let's suppose that there is a computer glitch like this once a year, once in about 200 trading days and that it is randomly distributed. That probably overestimates the risk but it makes the numbers easy.

In that case, you have a 0.5% chance, one in two hundred, of picking that day for your annual check of the stock or fund price. If you are unlucky enough to pick the day of that computer glitch, you do what the OP did here, try to sanity check it. But you have a very low probability of encountering that hassle.

OTOH, if you are checking every day, you have a 100% chance of seeing the computer glitch and having to hassle around to sanity check it. Guaranteed hassle, IOW.

But the important point is this: The price series of any reasonably diversified portfolio is a random walk with a tiny upward bias. Take a hypothetical broad equity fund (like the equity component of VTINX) that is priced around $100. An optimist might hope for an upward bias over time of 8%, or $8.00. That is 4 cents per trading day. There is no way that a bias of 4 cents per day can be discerned by studying the trading noise that is the daily price. Even one year is really too short.

Five years, ten years, or longer are the periods over which the total return of this fund can maybe be fairly evaluated. People just don't want to wait that long. I'm guilty of this. I benchmark portfolios managed for a couple of nonprofits. My rule with them is to wait and accumulate two years of actual data (not backtests) before making any kind of judgment comparing the portfolios to their benchmarks. Statistically valid? Probably not.

But looking at daily prices is a complete waste of time.

I'm the OP - after the "glitch" was fixed my ? level diminished rather substantially. But nonetheless it puzzles me that an outfit like Vanguard would post price updates without someone doing a sanity check. Kinda of makes one wonder about the reality of all the pretty numbers that flash on our computer screens
As to checking everyday - well some people like to watch soap operas, I like to watch the stock market I suppose similar sort of entertainment.

 

[OldShooter]

... As to checking everyday - well some people like to watch soap operas, I like to watch the stock market I suppose similar sort of entertainment.

Nothing wrong with that. Everyone needs a hobby. Just try very hard not to do anything as a result of watching so closely.

I watch the markets too, but for me it is kind of like being in one of those restaurants/wannabe sports bar with lots of soundless televisions. They always seem to show people playing with balls of various sorts. They tend to catch my eye too, but in the end I have no idea what is going on, nor do I care.

 

[steelyman]

This thread has been dormant since an apparent hiccup in pricing last year, but the thread subject is perfect.

I’d never heard of VTINX before. Am I correct in thinking that this is the fund that other Vanguard target date funds “graduate into” after their dates (years) have been reached?

 

[DatumPoint5]

From the VTINX Vanguard description

Product summary
The Target Retirement Income Fund is designed for investors already in retirement.

The fund seeks to provide current income and some capital appreciation by investing in 5 Vanguard index funds. The fund holds approximately 30% of assets in stocks and 70% in bonds.

This is also the allocation that all Target Retirement Funds are expected to assume within seven years after their designated retirement dates. Investors in this fund should be willing to accept modest movement in share price and be able to tolerate the market risk that comes from the volatility of the stock and bond markets.

 

[steelyman]

Thanks. So it seems like next up in the lineup is the 2015 fund. The 30/70 AA is an interesting one on which to settle.

 

[samclem]

The 30/70 AA is an interesting one on which to settle.

Yes, it's probably lighter in equities than most folks with a long retirement might want/need. But, the stock allocation on the designated "retirement date" in each target fund's name is about 50%, with a gradual ramp-down to the final 30% level over the next 6 years. For example, the Target 2015 fund (4 years ago) is still 40% stocks right now (24% US, 16% International). For somebody who retired at 65 and is now 69, 40% stocks might be about where they want to be.

It's a good idea for investors to look beyond the "Target Date" in the names of these funds and to instead see if the underlying asset allocation meets their needs. I'd guess many ER's would pick a fund with a date well after they retire in order to keep the equity allocations higher for a decade or so.

 

[steelyman]

It's a good idea for investors to look beyond the "Target Date" in the names of these funds and to instead see if the underlying asset allocation meets their needs. I'd guess many ER's would pick a fund with a date well after they retire in order to keep the equity allocations higher for a decade or so.

I agree. Although I don’t own it, I use the Vanguard 2030 fund’s AA as a guideline for my retirement allocation and benchmark against it. I’m comfortable doing that and like leaving the specific stock/bond ratio to someone other than me.

[ADDED] I left my traditional employment in 2011.