Bogle: Keeping Your Portfolio on Track
The Vanguard founder and former chairman discusses some of the problems with recent allocation investments and how investors should approach risk and return.
Dan Culloton: That rule of thumb you mentioned, about subtracting your age from 100 and setting your asset allocation that way, has in recent years - at least up until the bear market - been called into question. People saying that would leave you with an asset allocation that was too conservative. It led to the advent of target date retirement funds and other sort of more sophisticated asset allocation vehicles. And yet a lot of vehicles which were supposed to more sophisticated underperformed really basic, simplistic balanced funds like Wellesley Income (VWINX), Wellington (VWELX), Balance Income (VBAIX), or just your simple rule of thumb.
What do you think has been exposed - what do you think the bear market has done to target date funds, managed payout fund, market neutral funds, all this sort of innovation?
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.