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Participant ○

Re: Choice of ONE managed Balanced fund as benchmark....

As a benchmark: VGSTX.

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Explorer ○

Re: Choice of ONE managed Balanced fund as benchmark....

Things I like about Vanguard STAR (VGSTX):

•Good selection of actively managed stock funds.

•Substantial allocation to foreign stocks, which is something I would seek.  Vanguard Wellington has only a token holding in foreign stocks and Vanguard Balanced Index--whose entire stock component is the domestic Total Stock Market Index--effectively has none.

•Among STAR's bond holdings, one-third is in Vanguard GNMA.  I'm familiar with the debates about GNMA market price behavior, "convexity," etc.  They don't faze me at all.  GNMAs carry a full-faith-and-credit, Treasury-like guarantee of principal and interest repayments on this fund's constituent bond holdings, and over long periods of time the performance of Vanguard GNMA is very similar to Vanguard Total Bond Market, with the added attraction of GNMA's higher-overall-credit-quality portfolio.

Things I don't like about Vanguard STAR:

•One-third of STAR's bond portfolio is in Vanguard Short-Term Investment Grade.  I'm in the take-your-risks-on-the-equity-side camp, and Morningstar's most recent portfolio analysis shows that this bond fund has no meaningful holdings in Treasury-quality issues, and that almost 30% of the fund's entire portfolio is rated BBB or lower.  For me that's a definite turn-off.

http://portfolios.morningstar.com/fund/summary?t=VFSTX

•Another one-third of STAR's bond portfolio is in Vanguard Long-Term Investment Grade.  This fund, according to Morningstar, has a higher overall credit quality than the Short-Term fund, but it still has negligible Treasury-quality holdings (less than 5%).  Notwithstanding its name, it's not so much an "investment grade" fund--in any ordinary sense of the term, Treasurys are certainly among "investment grade" bonds--but, rather, a corporate bond fund (over 77%) with a dash of munis (10%).  And, as a long-term portfolio, it would be likely to suffer for quite a while if interest rates rise again, although I don't actually expect that to happen in the near future.

http://portfolios.morningstar.com/fund/summary?t=VWESX

Bottom line: I don't own STAR, and don't intend to, because if I were to own a balanced fund, I'd want its bond sleeve to carry much higher overall credit quality than is offered by two of the three funds among STAR's bond holdings.  Other potential buyers may, of course, decide that they're not bothered at all by the STAR bond concerns which bother me.

If I were considering a single balanced fund, I'd be likely to choose one of Vanguard's Life Strategy or Target Retirement funds, where at least the U.S. bond vehicle is the fairly high-credit-quality Total Bond Market Index, although all of the Life Strategy and Target funds also include a dash of Vanguard Total International Bond, which I'm not wild about, and don't really think necessary, but which at least includes a lot of foreign government  issues.

But Vanguard Life Strategy or Target Retirement funds would presumably be unacceptable to the OP here, whose thread title indicates an interest only in actively managed  balanced funds.

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Frequent Contributor

Re: Choice of ONE managed Balanced fund as benchmark....

I am not a slavish adherent to benchmarks, but for taxable I use VTMFX and for tax-deferred both VWIAX and VSCGX.

I am a conservative older guy. 😉

Bob

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Frequent Contributor

Re: Choice of ONE managed Balanced fund as benchmark....

I very much like the new direction of VWELX and would choose it more than what equity mix it had before.

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Participant ○○

Re: Choice of ONE managed Balanced fund as benchmark....

@FatKat   I pretty much had settled on VWELX for my needs with a small initial investment pending. I think it fulfills what I'm looking for.

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Frequent Contributor

Re: Choice of ONE managed Balanced fund as benchmark....


@mikes425 wrote:

@FatKat   I pretty much had settled on VWELX for my needs with a small initial investment pending. I think it fulfills what I'm looking for.


I have held it for years and am a more enthused by it now that it has more a blend of growth and value, than mainly a value equity sleeve and have considered adding to the fund 

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Explorer ○○○

Re: Choice of ONE managed Balanced fund as benchmark....

If you are knowledgeable about mutual funds, do you really need a financial advisor for picking funds? The advisor just takes your money. If your advisor was really, really good he would be a fund manager at Vanguard or T. Rowe. Am I right?

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Explorer ○○○

Re: Choice of ONE managed Balanced fund as benchmark....

With a good mutual fund, you know the 5, 10, 15 year record of the fund, how it does in good and bad markets, Morningstar reviewer opinions ETC. You know relatively little with a financial advisor. Why pay an advisor? Right?

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Participant ○○

Re: Choice of ONE managed Balanced fund as benchmark....

@Warren1  That’s a whole different discussion, but...you asked.  I endured the 2008 crash on my own with no advice, the most stress I’ve ever experienced, and some decisions I regret, having gone too conservative and never raising equity above 45% since.  I turned to this FA in late 2009. He was/is a former global mutual fund manager,  and, one of few FAs i could find who’d work on an hourly basis. far less expensive than the conventional 1% AUM 'standard.'   For better or worse, he did help me double my money in ten years albeit with conservative returns, and at least I had someone to bounce ideas off of.  Yes I could’ve realized a lot higher growth than that but no point looking back. This year, after reaching about 2.1M in assets, I experienced a crash bigger than 1929 with unprecedented uncertainty.  I felt I needed more active attention than the hourly ‘as needed’ relationship, to help navigate the totally unknown - for awhile at least, so i negotiated an AUM fee of about .055% with this FA. (and i at least hadn't been paying 10k+ a year for the past eleven years - so there's that ; )

At age 62, i need to be a little more cautious, and think about preservation, even while my risk appetite has actually grown.  If this gives me the value of greater peace of mind, i’m ok with the FA. He can also provide some timely retirement planning advice.  Just thought I’d see how see how this goes, and evaluate the ROI after expenses; give it a trial run as it were.   If it isn't/wasnt worth it, i can always go elsewhere, go back to an hourly 'format',  or DIY it again having gained greater risk tolerance and confidence in recent years. 

Like I said...a different topic, but, you asked.😏  

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Explorer ○○○

Re: Choice of ONE managed Balanced fund as benchmark....

Your answer makes a lot of sense...thank you! 

Sent from Yahoo Mail on Android
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Frequent Contributor

Re: Choice of ONE managed Balanced fund as benchmark....

We all went through stages in our investment career.  For me, froom multiple mutual funds with precise asset allocation and diversification to a few (1-2) core funds for simplicity, then finally to DIY index funds for average market performance with lower-cost and even more simplicity.

(1) I do not have to examine various funds before selection (have paid my dues in that when young) and eventually to worry about/wonder why they underperform.

(2) Average (and boring) performance gain/loss is perfectly fine with me at my current portfolio accumulation value.   

(3) The sense that I am in full control of managing my own money is priceless.

Again, just me:)

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Participant ○○

Re: Choice of ONE managed Balanced fund as benchmark....

@51hh  Belated reply from OP here.  I totally get your choices and i may well wind up wanting to do this myself again...it was somewhat an impulsive convenience decision for me to simplify things, but i also see the obvious downside of relinquishing .05 to 1% to an FA in a PF that likely won’t entail much difference in terms of trading activity (infrequent) than keeping this going with him on a periodic hourly basis. Yes there is some benefit in more hands on mgt. as far as rebalancing/loss harvesting but of course anymore platforms like VG and Schwab continue to offer DIY options for this in a self managed account. 

With work income no longer a very compelling thing for me and added expense looming for an individual health plan as i lose a performer’s union’s insurance coverage, i wouldnt rule out taking a similar path to yours. I may be inclined to want to devote more time to investing on my own. I think my risk tolerance has gotten better over time. Could i do as well or far better with a diversified simple handful of funds (likely yes:) The  bottom line test will be, what is the ROI AFTER fees. i.e. will i get at least as-good, or better returns with an AUM arrangement vs my returns over the past 10 yrs in which i spent at most a few thousand bucks a year for occasional advice; and, with that model, realized about a 50% increase in NAV of my PF.

Is there enough added value to warrant the change?  I’m obviously reflecting on that question already. Meantime, in these proverbial ‘unprecedented times’ -there is some peace of mind in having the PF on someone else’s radar with more responsive oversight than were i relying on my whims to determine whether and when i should give him a call to discuss volatile conditions.  

 Thanks

 

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Frequent Contributor

Re: Choice of ONE managed Balanced fund as benchmark....

@mikes425 : Totally understood.  Each person has to develop his own strategy that he feels comfortable with and restful.  You have done a great job thus far; just go with your plan and modify it only when you see fitting. 

All suggestions here are good, but they serve only as your references going forward.

 

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Explorer ○○

Re: Choice of ONE managed Balanced fund as benchmark....

OK.  While I am a big fan of Wellesley, I would still recommend Vanguard Balanced Index, VBIAX, as the benchmark for Balanced Funds.  Without a doubt, vbiax, sets the standard for balaced funds in my opinion.

Just another point of view.

Hondo

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