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Which VG Fund?
Old 10-15-2011, 09:08 AM   #1
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Which VG Fund?

My wife and I both have Roth IRAs that have been invested in the VG Asset Allocation Fund (VAAPX) for about 10 years. VG has decided to discontinue this fund and merge it into VBINX, a balanced index fund with a 60% stock/40%bond allocation. This is a shift from active to passive management and will have lower costs. What I am trying to figure out is whether to just go with the proposed merger or convert the fund to VG Wellesley (VWINX) or Wellington (VWIAX) or some other VG fund.

Our intention with these IRAs is that they will be our 'legacy' to our two boys, but it is also an emergency fund source if our other investments prove inadequate. The legacy provisions are why we are holding two accounts with the same funds in the same amounts.

While I tend to be a fan of index funds (my 401k type fund (TSP) is index invested) my wife has done pretty well with a 65% Wellesley/35%Star (VGSTX) portfolio in her IRA. Low fees and good management seem to be effective.

So looking for suggestions about which fund to use.

I'll try this over at Bogleheads too but they frequently give long, rambling and sometimes less useful advice.
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Old 10-15-2011, 09:31 AM   #2
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When you plug in all four of the funds into the "compare funds" page on the Vanguard site, it looks like any of the three options you mention would have performed better over the last 10 years.

Of course the question that needs answering is which will perform better over the next 10...
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Old 10-15-2011, 09:35 AM   #3
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convert the fund to VG Wellesley (VWINX) or Wellington (VWIAX)
+1 on any combination of the above
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Old 10-15-2011, 10:01 AM   #4
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Half Wellington, half Wellesley.
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Old 10-15-2011, 10:03 AM   #5
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Half Wellington, half Wellesley.
Pretty easy way to build a 50/50 asset allocation, actually.
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Old 10-15-2011, 10:08 AM   #6
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Yakers, I'm sure you've noted the AA of the discontinued fund is 90/10 vs a much more conservative 65/35 (Wellington), 60/40 (Balanced Index) down to as low as 35/65 (Wellesley). My point is there is a significant difference in the AA from where you are today - not that there is anything wrong with that.

As others have mentioned, a mix of Wellington and Wellesley might be a good way to go.
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Old 10-15-2011, 11:28 AM   #7
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+1 on any combination of the above
+2, just pick a combination you are comfortable with
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Old 10-15-2011, 11:29 AM   #8
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Half Wellington, half Wellesley.
If W/W contained more international stocks it would be a really elegant portfolio.
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Old 10-17-2011, 10:09 AM   #9
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Just a data point: I inherited my mother's IRA in 2002 which was invested in VBINX. I have been taking the RMD's based on my life expectancy ever since. It is still worth more today than when I inherited it.
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Old 10-18-2011, 08:59 AM   #10
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If W/W contained more international stocks it would be a really elegant portfolio.
How about a combination of Wellesey and one of the Vanguard Target Retirement funds depending on desired equity allocation for some additional international, total stock and bond market exposure?
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