Vanguard's Performance Report: Vanguard Funds Surpassed Peers Over Long Term

[HI Bill]

So what's the lesson? Use past performance as a tool to decide where to invest?

The lesson is that lowest costs matter, along with a very rigid investing philosophy, along with being a shareholder-owned company.

Of course, past performance doesn't indicate future performance. But when looking at those numbers over those time periods, I'm not betting on the underdogs right now.

But....some of the former losers are doing better...if you look at the trends in Vanguard's performance, Vanguard is losing ground as other firms offer more diversified ETFs and mutual funds, and lower costs. I suspect in the next 20 years, it will be a much more level playing field. Thanks, VG!

 

[VanWinkle]

The lesson is that lowest costs matter, along with a very rigid investing philosophy, along with being a shareholder-owned company.

Of course, past performance doesn't indicate future performance. But when looking at those numbers over those time periods, I'm not betting on the underdogs right now.

But....some of the former losers are doing better...if you look at the trends in Vanguard's performance, Vanguard is losing ground as other firms offer more diversified ETFs and mutual funds, and lower costs. I suspect in the next 20 years, it will be a much more level playing field. Thanks, VG!

I think your point is that the playing field would not have been leveled to lower costs without Vanguard leading the way!! I agree, Thanks Vanguard!

 

[OldShooter]

Interesting Reuters piece this morning: https://www.reuters.com/article/us-...cut-fees-fight-for-market-share-idUSKCN1MD18I Contains some very pleasing graphs of fund fee trends. Oddly, Vanguard is not even mentioned.

 

[mhk7]

We have our funds in targeted year funds...like 2020 2025...some is in Vanguard and some in a Deferred Comp...since 2013, their rate of returns are 5.3% and 6%...my question is: What is a rate of return that we should expect? Can we do something different that would still be stable and earn more without worry?

FYI: We are 67 and 68 and don't want to lose any money.

Thanks for any advice!

 

[OldShooter]

We have our funds in targeted year funds...like 2020 2025...some is in Vanguard and some in a Deferred Comp...since 2013, their rate of returns are 5.3% and 6%...my question is: What is a rate of return that we should expect? Can we do something different that would still be stable and earn more without worry?

FYI: We are 67 and 68 and don't want to lose any money.

Thanks for any advice!

I don't like target date (or any blended fund) for the reason that your question implies: It is difficult or impossible to benchmark them. Constructing the same allocation using one equity fund and one bond fund gives total visibility to each fund's total return relative to whatever benchmarks you like. That's what I suggest.

The other problem is poorer visibility into the investment strategy. Check this horror story: https://www.reuters.com/article/us-...ers-on-risky-path-to-retirement-idUSKBN1GH1SI where Fido stealthily went to high risk strategies in their target date funds in order to goose performance. These target funds tend to get treated as buy-and-forget black boxes. I tell the students in my Adult-Ed investment class that it is mandatory to look inside the box from time to time.

Re not losing money and higher return without higher risk, sorry but the world does not work that way very often. You might benefit from this thread: http://www.early-retirement.org/forums/f28/starter-books-93976.html

 

[HI Bill]

I don't like target date (or any blended fund) for the reason that your question implies: It is difficult or impossible to benchmark them. Constructing the same allocation using one equity fund and one bond fund gives total visibility to each fund's total return relative to whatever benchmarks you like. That's what I suggest.

I totally agree. I bought a target date retirement fund, and regret it. I sold it and bought VTI and BND. I can keep an eye on the performance and balances of both, and rebalance as I see fit. VG won't go very far out the box chasing performance with these funds, and you won't make much more than inflation rates in terms of gain, if you've chosen a fund with a date near the current year. They're way too conservative for me (especially the Target 2015 fund).

 

[samclem]

These target funds tend to get treated as buy-and-forget black boxes. I tell the students in my Adult-Ed investment class that it is mandatory to look inside the box from time to time.

Re not losing money and higher return without higher risk, sorry but the world does not work that way very often. You might benefit from this thread: http://www.early-retirement.org/forums/f28/starter-books-93976.html

Point well taken. But if an investor will not take an active interest in rebalancing, doing comparisons against indices, checking that costs haven't been jacked up while they weren't looking, etc, and if they aren't going to take advantage of tax loss harvesting, etc, then I would still urge then to put their funds in a VGD target date fund rather than have them use a AUM-compensated advisor or to DIY an AA strategy without doing the ongoing rebalancing. It's a risk, but if the corporate culture at VGD doesn't diverge much farther from Bogle-ism, then I think such an investor will be okay, and will likely do better than the alternatives (and do better than most investors).

 

[OldShooter]

I totally agree. I bought a target date retirement fund, and regret it. I sold it and bought VTI and BND. I can keep an eye on the performance and balances of both, and rebalance as I see fit. VG won't go very far out the box chasing performance with these funds, and you won't make much more than inflation rates in terms of gain, if you've chosen a fund with a date near the current year. They're way too conservative for me (especially the Target 2015 fund).

As I said, I don't like them. What I tell people, though, is if you want to buy one there is absolutely no reason that its date has to match your planned retirement date. If you want to be more aggressive, select a target date that is well past your planned retirement date. If less aggressive, select one that is earlier than your planned date. But, better, don't buy one.

 

[Rianne]

We have approximately 20+yr history with VG thanks to Bob Brinker and long rides in the car to and from family functions. We planned our travel time to Bob's show on Sundays. Have some outside investments here and there but the bulk in VG. The returns have been solid and obviously put us in a great position to FIRE young enough to enjoy our good health. We are re evaluating bond funds.

 

[VanWinkle]

Interesting Reuters piece this morning: https://www.reuters.com/article/us-...cut-fees-fight-for-market-share-idUSKCN1MD18I Contains some very pleasing graphs of fund fee trends. Oddly, Vanguard is not even mentioned.

Kind of like talking about the fastest land animals and not mentioning Cheetahs!!

 

[mhk7]

As I'm sure you've already guessed I know little about investing...but I like the 10% ROI...we used to get close to that when we worked and were more aggressive but since we retired we took the easy no worry targets. I understand rebalancing and I used to get a Morningstar report on our investments. Now I look at the investments every 3 months or so.

I don't like hiring someone so they can call and try to talk us into changing our portfolio so the only option is DIY or remain with the targets.

Thank you all for your insite...I can see that with a little effort on my part, we could be achieving a better return. I'll do some reading...thanks!