Author Topic: Which of these vanguard funds should I choose?  (Read 15465 times)

starguru

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Which of these vanguard funds should I choose?
« on: November 04, 2013, 12:42:48 PM »
This is for my employer 401k.  They don't appear to have the total market

These are the Vanguard funds available:

VMRXX         Vanguard Prime Money Market Instl   
VBMPX         Vanguard Total Bond Market Idx InstlPls
VWNAX        Vanguard Windsor II Adm
VIIIX           Vanguard Institutional Index Instl Pl 
VEMPX         Vanguard Extended Market Idx InstlPlus *
VTPSX          Vanguard Total Intl Stock Idx InstlPls

I am currently putting all my contributions into their 2045 targeted retirement year fund.

Should I really switch to  self directed 401k, so I could choose the fund I want?

Michread

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Re: Which of these vanguard funds should I choose?
« Reply #1 on: November 04, 2013, 01:33:35 PM »
Depends on YOU! 

Have you gone to the Vanguard website and read about all those choices?

Vanguard 2045 is this:

1    Vanguard Total Stock Market Index Fund Investor Shares            63.0%
2    Vanguard Total International Stock Index Fund Investor Shares    27.0%
3    Vanguard Total Bond Market II Index Fund Investor Shares†              8.0%
4    Vanguard Total International Bond Index Fund Investor Shares      2.0%

starguru

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Re: Which of these vanguard funds should I choose?
« Reply #2 on: November 04, 2013, 02:02:24 PM »
this is all done thru schwab; I meant *their* lifepath 2045 fund.  Sorry, my bad.

I have read the literature on these; I'm liking the VEMPX cause it's expense ratio is 0.10%.  Im not liking the lack of a total market option, though. 



rubybeth

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Re: Which of these vanguard funds should I choose?
« Reply #3 on: November 04, 2013, 02:05:29 PM »
this is all done thru schwab; I meant *their* lifepath 2045 fund.  Sorry, my bad.

I have read the literature on these; I'm liking the VEMPX cause it's expense ratio is 0.10%.  Im not liking the lack of a total market option, though.

VIIIX expense ratio is waaay less at 0.025%. https://www.google.com/finance?q=:VIIIX It's what I have all of my 457b fund in. I think I paid like $4 on fees in it this year and have made over $2k without even contributing this year (paid off all debt instead).

starguru

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Re: Which of these vanguard funds should I choose?
« Reply #4 on: November 05, 2013, 06:41:51 AM »
this is all done thru schwab; I meant *their* lifepath 2045 fund.  Sorry, my bad.

I have read the literature on these; I'm liking the VEMPX cause it's expense ratio is 0.10%.  Im not liking the lack of a total market option, though.

VIIIX expense ratio is waaay less at 0.025%. https://www.google.com/finance?q=:VIIIX It's what I have all of my 457b fund in. I think I paid like $4 on fees in it this year and have made over $2k without even contributing this year (paid off all debt instead).

is VIIIX similar to a total market solution?  Again I am limited to the above vanguard funds and want to change before thursday.

extole

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Re: Which of these vanguard funds should I choose?
« Reply #5 on: November 05, 2013, 06:50:45 AM »
VIIIX tracks the S&P 500 with a great expense ratio.

https://personal.vanguard.com/us/funds/snapshot?FundId=0854&FundIntExt=INT

Cheers

rubybeth

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Re: Which of these vanguard funds should I choose?
« Reply #6 on: November 05, 2013, 07:00:46 AM »
VIIIX tracks the S&P 500 with a great expense ratio.

https://personal.vanguard.com/us/funds/snapshot?FundId=0854&FundIntExt=INT

Cheers

Yep, I double-checked last night. It's my favorite.

kyleaaa

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Re: Which of these vanguard funds should I choose?
« Reply #7 on: November 05, 2013, 02:06:23 PM »
Institutional Index is essentially equivalent to the total market index (technically it's a large-cap index fund) with an ultra-low expense ratio. If you want small-caps, add a dose of the extended market index. You can precisely recreate the total stock market fund using those two funds if you want, but just the institutional fund by itself is an excellent choice. I wish I had access to it.

starguru

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Re: Which of these vanguard funds should I choose?
« Reply #8 on: November 06, 2013, 06:43:22 AM »
So, given that I'm 36 and tolerate a bit of fluctuation (although I HATE it when its happening) would it be wise or unwise to just put 100% of my 401k contributions into that index fund instead of schwab's 2045 life path?  Maybe do 70% index and then 30% life path?

kyleaaa

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Re: Which of these vanguard funds should I choose?
« Reply #9 on: November 06, 2013, 11:17:45 AM »
So, given that I'm 36 and tolerate a bit of fluctuation (although I HATE it when its happening) would it be wise or unwise to just put 100% of my 401k contributions into that index fund instead of schwab's 2045 life path?  Maybe do 70% index and then 30% life path?

Unwise. You also have access to the Total International index fund and the Total Bond Market fund. You should utilize both in order to be diversified. The rule-of-thumb is that you should invest somewhere between your age in bonds and your age - 20 in bonds. For a 36 year old, that would put you between around 36% and 16% bonds.

More on the three fund portfolio:
http://www.bogleheads.org/wiki/Three-fund_portfolio

If you're having trouble coming up with exact proportions, just go with 1/3 in each of the above three funds.

CB

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Re: Which of these vanguard funds should I choose?
« Reply #10 on: November 06, 2013, 12:15:48 PM »
Which of these vanguard funds should I choose?

As others have said, it really depends on your risk preferences.  Unfortunately a few of the funds in the list didn't exist until late 2010 so they're a bit difficult to evaluate.  However, I put together a quick list of their performance (annualized average monthly return) and downside risk (downside deviation of monthly returns with Minimum Acceptable Return set to zero) from January 2011 to yesterday's close.  These numbers assume dividends are reinvested, and the money market fund is left out since it's essentially like holding cash:

 
Fund   Annualized Growth  Downside Deviation (monthly)
VBMPX   3.51%              0.89%
VWNAX  15.31%              3.58%
VIIIX  15.02%              3.53%
VEMPX  15.87%              4.39%
VTPSX   5.81%              5.02%


For example, since 2011 VIIIX has averaged approximately 15% per year in returns, but during "down" months has tended to lose about 3.5% of its value (though the latter statement is a bit of an oversimplification).  By these metrics it looks like VTPSX is the only real stinker in the group, but again the time across which they can all be compared is pretty short to say much.  Just for comparison, the returns for VTSAX over the same period are 15.16% and the downside deviation 2.12%.  Hope that helps you figure out what you want to do.

starguru

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Re: Which of these vanguard funds should I choose?
« Reply #11 on: November 06, 2013, 12:54:35 PM »
So, given that I'm 36 and tolerate a bit of fluctuation (although I HATE it when its happening) would it be wise or unwise to just put 100% of my 401k contributions into that index fund instead of schwab's 2045 life path?  Maybe do 70% index and then 30% life path?

Unwise. You also have access to the Total International index fund and the Total Bond Market fund. You should utilize both in order to be diversified. The rule-of-thumb is that you should invest somewhere between your age in bonds and your age - 20 in bonds. For a 36 year old, that would put you between around 36% and 16% bonds.

More on the three fund portfolio:
http://www.bogleheads.org/wiki/Three-fund_portfolio

If you're having trouble coming up with exact proportions, just go with 1/3 in each of the above three funds.

I thought bond funds are a bad idea since interest rates have no place to go but up, and bond funds go down when interest rates go up.

kyleaaa

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Re: Which of these vanguard funds should I choose?
« Reply #12 on: November 06, 2013, 02:56:42 PM »
So, given that I'm 36 and tolerate a bit of fluctuation (although I HATE it when its happening) would it be wise or unwise to just put 100% of my 401k contributions into that index fund instead of schwab's 2045 life path?  Maybe do 70% index and then 30% life path?

Unwise. You also have access to the Total International index fund and the Total Bond Market fund. You should utilize both in order to be diversified. The rule-of-thumb is that you should invest somewhere between your age in bonds and your age - 20 in bonds. For a 36 year old, that would put you between around 36% and 16% bonds.

More on the three fund portfolio:
http://www.bogleheads.org/wiki/Three-fund_portfolio

If you're having trouble coming up with exact proportions, just go with 1/3 in each of the above three funds.

I thought bond funds are a bad idea since interest rates have no place to go but up, and bond funds go down when interest rates go up.

Nope. Not a bad idea. Market timing doesn't work.

rogar

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Re: Which of these vanguard funds should I choose?
« Reply #13 on: November 06, 2013, 05:18:13 PM »
The advantage of target retirement funds like the 2045 is that you can put them on auto pilot and they will rebalance to their target asset allocation.  A lot of people don't have the time to mess with this. I think by traditional thinking their asset breakdown looks ok.

If you want  a little more control over things, the individual funds seem to offer a reasonable combination of just about any option depending on your preferences, but I think it becomes more of a personal issue.  I am very conservative and my preference would say the 2045 fund is a little too heavy in stocks and international and light in bonds and maybe money market.