VG Life Strategy Income Fund

[mystang52]

Planning way ahead, next year we have to start RMD. We do not need any of the proceeds as our pensions and S.S. exceed our spending needs. However, we are conservative and want to park the proceeds "safely." This Fund strives for a 20% stock allocation. We have our IRA's with Vanguard so I looked to them first. Any thoughts about this? I like the idea of a one-stop shop to park the RMD, but is there a reason to either use 2 separate Index funds, or look to a different fund from Fidelity, or I-don't-know...?

 

[DrRoy]

I don't tend to like a "fund of funds". While still low, you are paying overlapping fees. I would go the 2 index fund route.

 

[disneysteve]

I don't tend to like a "fund of funds". While still low, you are paying overlapping fees. I would go the 2 index fund route.

That’s not true, at least not with Vanguard. You only pay the fees of each fund. There is no extra fee on top of that.

 

[friar1610]

I considered LS Income but decided on Target Retirement Income for 2 reasons:
- at 30% equity it was modestly higher than LS but still fit the “conservative” profile
- unlike LS Income, it has an allocation to short-term TIPS as part of its bond holdings.

Over the long-haul I’m sure the results will be quite similar but there might be a little more oomph in the TR fund.

 

[cj1717]

that’s not true, at least not with vanguard. You only pay the fees of each fund. There is no extra fee on top of that.

agree

 

[tulak]

I would hold the funds directly. The idea of a fund of funds is great, but my concern is that they tweak what funds are held, adding what I would consider to be inappropriate funds. I guess I want more control.

 

[pb4uski]

I agree, but in this case the fund composition is pretty simple.

Vanguard Total Bond Market II Index Fund
56.00%
Vanguard Total International Bond II Index Fund
24.20%
Vanguard Total Stock Market Index Fund Investor Shares
11.70%
Vanguard Total International Stock Index Fund Investor Shares
8.10%

 

[Phroig]

Retirement Income has slightly lower expenses than the LifeStrategy fund. The former invests in Institutional funds, the latter seems to be in Investor class funds.
Also, I assume folks realize that 40% of the equity allocation is in International. Both also have a significant allocation to international bonds.

 

[tulak]

I agree, but in this case the fund composition is pretty simple.

Yes, Vanguard is reasonable with their target fund composition. But they did add international bonds at one point and increased their allocation to international, so there’s no guarantee that they won’t change the composition of the target fund.

Fidelity is also reasonable, as long as you stick with the index version of their target funds. Their non-indexed versions are crazy though. Here’s an example of the US allocation for their non-index 2060 fund:

Equities
49.59%
Fidelity Series Growth Company Fund
9.20%
Fidelity Series Large Cap Stock Fund
8.65%
Fidelity Series Stock Selector Large Cap Value Fund
6.07%
Fidelity Series Opportunistic Insights Fund
5.50%
Fidelity Series Value Discovery Fund
5.32%
Fidelity Series Blue Chip Growth Fund
4.99%
Fidelity Series Large Cap Value Index Fund
2.73%
Fidelity Series Small Cap Opportunities Fund
2.68%
Fidelity Series Intrinsic Opportunities Fund
1.86%
Fidelity Series All-Sector Equity Fund
1.80%
Fidelity Series Small Cap Discovery Fund
0.80%
Fidelity Series Small Cap Core Fund
0.01%
S&P500 EMINI FUT SEP23 ESU3
-0.02%
Commodities
0.71%
Fidelity Series Commodity Strategy Fund
0.71%

https://fundresearch.fidelity.com/mutual-funds/composition/315793729

As always, buyer beware.

 

[Route246]

I'm totally against bond funds but that is a personal choice. You are subject to price depreciation, for whatever reason. I prefer laddered zero coupon treasuries as I'm not at the mercy of skittish fund holders when rates start moving.