UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev | Next
Author: jbking Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Target Funds Date: 1/29/2006 4:26 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Greetings 110,

Anyone here using any of the "Target" Funds for the bulk of Mutual Fund retirement investments?

I don't and I would be surprised if many that read this board do use them as they are intended for those that don't want to spend a lot of time covering things.

Just how diversified, asset wise, are they?

Let's open the can of worms here....

On the "yes they are diversified camp" is the fact that they tend to be a fund of funds that covers EVERYTHING within a given asset allocation range. So for example the 2025 Target fund from Vanguard has 45% in the Total Stock Market, 42% Total Bond Market and the rest in a couple of international index funds, so what is it missing other than emerging markets and foreign bond allocations? This is where John Bogle would probably be from what I read of his books.

On the "no, they are overweighted in some areas camp" is the fact that by using the market weighting this skews towards large-cap and growth stocks since they will have larger market caps. In this camp you would have to use your own combination to get an appropriate coverage in those small-cap and value areas as these would be a smaller part of the market. This would be the Larry Swedroe, DFA, etc. camp that believe in small-cap and value stocks having a higher risk premium that will be rewarded.

The question is which camp do you see yourself in?

I like the idea of simplicity, but not sure how well they cover the style box...

Define cover. Do you mean like 11% in each of the 9 squares in the Morningstar style box or whatever the market's distribution among the 9 squares is? Which do you want? These are rather different things given that ~70% of the US market is in that top row of boxes on one level.

Regards,
JB
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement