Hillbilly
Recycles dryer sheets
- Joined
- Mar 20, 2007
- Messages
- 161
Help me out here folks.
I have been confused lately about asset allocation. I know on paper that it can be shown to be one of the most important decisions one makes. I can't disagree with that. And the math involved is not hard. My main issue is can it been done easily?
Here is where I'm coming from. Let's take Vanguard for example. IMHO one of the better fund companies out there with sound management of the company and funds. I have always watched the Asset Allocation fund they have to see what is going on especially the asset allocation to stocks/bonds etc and the returns generated. Today I found the following from Vanguard's web site:
Asset Allocation Fund as of 3/31/07
5 yr return = 7.84%
10 yr return = 9.18%
Wellington Fund (that I own) as of 3/31/07:
5yr return = 8.49%
10yr return = 9.87%
The Wellington fund is limited on allocation to stocks/bonds, however, the Asset Allocation fund can "asset allocate" as needed to maximize return and/or minimize risk. (I'm not trying to data mine since it has been a few years since I have compared these two funds. I must say that I do like the objective of the Asset Allocation fund better than Wellington. Please take a look at the remaining hybrid funds listed on Vanguard's site and the 5 & 10 year returns to verify and see if you have any additional notes to add. Some hybrid funds offer higher and lower returns.)
Questions: Do you feel that "asset allocation" is an effective principle but not 100% feasible to implement? If the management of the Asset Allocation fund doesn't make large advances in the returns of this fund verse say a 60/40 balanced fund, are we to believe we can? Is the performance of the Asset Allocation fund telling us maybe the pros can't asset allocate easily either. What are your conclusions on the feasibility of asset allocation?
Have a great and productive day, Hillbilly
I have been confused lately about asset allocation. I know on paper that it can be shown to be one of the most important decisions one makes. I can't disagree with that. And the math involved is not hard. My main issue is can it been done easily?
Here is where I'm coming from. Let's take Vanguard for example. IMHO one of the better fund companies out there with sound management of the company and funds. I have always watched the Asset Allocation fund they have to see what is going on especially the asset allocation to stocks/bonds etc and the returns generated. Today I found the following from Vanguard's web site:
Asset Allocation Fund as of 3/31/07
5 yr return = 7.84%
10 yr return = 9.18%
Wellington Fund (that I own) as of 3/31/07:
5yr return = 8.49%
10yr return = 9.87%
The Wellington fund is limited on allocation to stocks/bonds, however, the Asset Allocation fund can "asset allocate" as needed to maximize return and/or minimize risk. (I'm not trying to data mine since it has been a few years since I have compared these two funds. I must say that I do like the objective of the Asset Allocation fund better than Wellington. Please take a look at the remaining hybrid funds listed on Vanguard's site and the 5 & 10 year returns to verify and see if you have any additional notes to add. Some hybrid funds offer higher and lower returns.)
Questions: Do you feel that "asset allocation" is an effective principle but not 100% feasible to implement? If the management of the Asset Allocation fund doesn't make large advances in the returns of this fund verse say a 60/40 balanced fund, are we to believe we can? Is the performance of the Asset Allocation fund telling us maybe the pros can't asset allocate easily either. What are your conclusions on the feasibility of asset allocation?
Have a great and productive day, Hillbilly