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If 2023 still face interest rate hikes (at least several smaller ones), 50/50 allocation will not improve much from the 60/40. 60/40 in S&P500/cash would have done better, but that is hindsight.
It is really a reward-risk trade off between two asset classes that have opposing correlation but that broke down last year as they approached 1.0. Thus no protection from bond allocation. You have to ask yourself whether this continues in 2023?
But other Vanguard allocation/balanced funds are either 60-40 or 40-60. For years, people have talked about a 50-50 mix of VWELX and VWINX to produce 50-50 allocation.
NOTE: Relative to bonds and no market support in 2022; a 50/50 mix of a broad based U.S. equity index and a broad based U.S. bond index had a combined total return of -16.32 % for 2022. The indexes I used are VITPX and VBMPX ,which are inside a 529 college account.
Relative to bonds and no market support in 2022; a 50/50 mix of a broad based U.S. equity index and a broad based U.S. bond index had a combined total return of -16.32 % for 2022. The indexes I used are VITPX and VBMPX ,which are inside a 529 college account.
Does Vanguard really think 2023 will be vastly better than 2022 ? If you look at the chart carefully, the breakdown is global allocation and not US only. Nevertheless the risk profile may be somewhat different, but not a significant improvement as the MarketWatch article implied. In addition, many details were left out from Vanguard.
Do 529 funds have oversea exposure too? VITPX and VBMPX are US stock and bond index funds, respectively.
Hi @Sven The two Vanguard funds are inside the UTAH 529; which we established in 2006. VITPX and VBMPX are the original tickers, and were changed several years (by Vanguard) ago for use inside of 529's. The new tickers are VSTSX and VTBSX. Both funds are U.S. centric. The total U.S. equity index performance is a mirror of the broad based ITOT etf, and I suspect many other U.S. total equity market funds. The total U.S. bond index is a performance mirror to the bond etf of AGG. This LINK is a current listing of the investment choices for the UTAH 529. We didn't use the age based investment choice that reduces equity exposure over time, and used the 'build our own mix' option, which was set at 50/50%. Sidenote: The ER's are so low, that the holdings are almost 'free'.
Last year this 60/40 global allocation fund lost 16%! So the MarketWatch article is puzzling that 50/50 allocation is better. Also I cannot locate the original source of the information in Vanguard site.
@Sven Not to mislead you or anyone else and to be fair to the Utah 529; my initial link was directly mostly to the Vanguard choices, as this was the conversation company in this thread. Utah has a full line of choices, which by law; may be adjusted 2 times in a calendar year. An overview of the other plan choices.
Comments
It is really a reward-risk trade off between two asset classes that have opposing correlation but that broke down last year as they approached 1.0. Thus no protection from bond allocation. You have to ask yourself whether this continues in 2023?
But other Vanguard allocation/balanced funds are either 60-40 or 40-60. For years, people have talked about a 50-50 mix of VWELX and VWINX to produce 50-50 allocation.
Wellington managed HBLAX is close to 50-50.
Do 529 funds have oversea exposure too? VITPX and VBMPX are US stock and bond index funds, respectively.
https://investor.vanguard.com/investment-products/list/529-portfolios
The two Vanguard funds are inside the UTAH 529; which we established in 2006.
VITPX and VBMPX are the original tickers, and were changed several years (by Vanguard) ago for use inside of 529's. The new tickers are VSTSX and VTBSX.
Both funds are U.S. centric. The total U.S. equity index performance is a mirror of the broad based ITOT etf, and I suspect many other U.S. total equity market funds. The total U.S. bond index is a performance mirror to the bond etf of AGG.
This LINK is a current listing of the investment choices for the UTAH 529. We didn't use the age based investment choice that reduces equity exposure over time, and used the 'build our own mix' option, which was set at 50/50%.
Sidenote: The ER's are so low, that the holdings are almost 'free'.
The LifeStrategy series of funds are constructed the same. For example, LifeStrategy Moderate Growth, VSMGX, is consisted of 37% Total stock market index, 25% Tot int’l market index, 27% Total bond index, and 12% Tot int’l bond index. https://investor.vanguard.com/investment-products/mutual-funds/profile/vsmgx#performance-fees
Last year this 60/40 global allocation fund lost 16%! So the MarketWatch article is puzzling that 50/50 allocation is better. Also I cannot locate the original source of the information in Vanguard site.
Not to mislead you or anyone else and to be fair to the Utah 529; my initial link was directly mostly to the Vanguard choices, as this was the conversation company in this thread. Utah has a full line of choices, which by law; may be adjusted 2 times in a calendar year.
An overview of the other plan choices.