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good allocation fund for early retiree

My sister who knows nothing about investing wants a conservative asset allocation fund in early retirement for an inheritance she doesnt need to live on.

I would usually go to VWINX, but I worry its large standard bond allocation will not be much of a buffer with interest rates so low. I doubt its benchmark AGG will be much help if stocks crash because of rising interest rates.

I wanted to give her max DD and recovery rates for several funds from major families but they all differ in % equity allocations.

Can anyone suggest a source for data on major fund families allocations for the income phase of target date funds so I can run an MFO comparison for her?

Comments

  • Unfortunately, the best-in-class PRWCX is still closed. JABAX has also done well. Fidelity has a fund screener where you can search all allocation funds, or just target-date funds if you want. You can also search by Sharpe Ratio or Standard Deviation, which is how I found funds like FIFKX FFFAX and FASIX . Vanguard offers sedate funds like VTINX and VASIX , although to be honest VWINX is outperforming ytd all the funds mentioned here except PRWCX.
  • If she does not need the money you might gently suggest something not too conservative for the decades ahead, like FPURX or one of the much later-dated Fido Asset Manager vehicles? JABAX is good, sure, also VALIX or its cheaper class if enough $ invested.
  • ......Or BRUFX. My wife's IRA is all in BRUFX. I might just mention DODBX, but although it's running hot at the moment, it's too volatile.
  • edited March 2021
    @carew388 said, “Unfortunately, the best-in-class PRWCX is still closed ...”

    I own some PRWCX. Great fund. But would you believe that over the past year DODBX has performed better? (+26.75% vs +22.57%). At the 5-year mark they’re close, with PRWCX slightly ahead (+13.61% vs +12.38%).

    One has David Giroux. But the other has lower fees (DODBX .53% .ER vs PRWCX .70% ER).

    There’s a great many good funds that would fill the needs of @sma3’s sister. Depends on a lot of factors I’m not qualified to judge. Just wanted to try and knock a bit of the luminescent cellophane off PRWCX. :)

    * My numbers came from Lipper.
  • A lot depends on whether or not you're going to "sit and forget" or not. Going back beyond the last month, AIGPX and FBALX have been good choices. Giroux maybe rotated a little early with PRWCX (closed), but prior to the last, maybe, nine months, was best of breed. Coming on now, DODBX, BUFBX, maybe MAPOX could be worth a look (more value). One could make the argument that vehicles holding more traditional 'ballast' bonds might have some trouble going forward.
  • edited March 2021
    The OP asked for suggestions on a "conservative asset allocation fund." Lots of great suggestions here but I'm not sure many of them are what the OP is looking for. (Some are actually aggressive AA funds.) To wit, I at least don't regard any AA fund with over a 50% stock allocation as a "conservative allocation fund." YMMV.

    In the 30%-50% category, other than VWIAX, I would suggest FMSDX and CFIAX. I own both of the latter and both are great LT holds that are each doing very well in the current market environment. VWIAX is historically a leader in this category but is limping through the current conditions. Former LT holder of it but have sold if off for the time being. Any of these though are LT keepers.

    In the 15%-30% category, RBBAX appears to be one of the best.
  • edited March 2021
    I agree with @Stillers in that “conservative allocation fund” might dictate something more conservative than many suggestions here for @sma3’s sister.

    I’d begin by asking her how big a drawdown she’d be comfortable with over a 1-3-year period. If inclined to pull the money out after a 10% downdraft, than funds like PRWCX wouldn’t be a good choice. I think Giroux is a bit optimistic in his recent annual report when he states his fund’s second goal: “Preserve shareholder capital over the intermediate term (i.e., three years)” - But hats-off to a manager willing to be that specific. Not many are.

    In looking forward to the day when I may no longer want to monitor, or even think about, my investments, I have my eyes set on PRSIX. Recently opened a small position in the fund. Yes - bond holdings in any fund are concerning. The good managers, however, diversify those into varying durations, varying credit risk and EM markets. Some employ hedging tactics as well. So don’t judge the book by its cover.
  • Hi @sma3
    My sister who knows nothing about investing wants a conservative asset allocation fund in early retirement for an inheritance she doesn't need to live on.
    I'll presume from your statement that: your sister is already in retirement and that her inheritance will be invested in a taxable account.

    I noted the following a few days ago regarding a 529 account that was started in 2006 but could be applied to a taxable account, too:

    >>>We set our own allocation, being 50/50 with VITPX and VBMPX. The expense ratio for the funds are .02 and .03%. VITPX holds 3,400 equities and VBMPX holds 18,000 bonds. YOW !!!
    The 50/50 ratio is required to auto balance once per year. So, the ratio has never traveled to far outside of 50/50.
    The 10 year total return for this blend of 2 funds is 8.705%.
    I've used FBALX as a benchmark for our own investments to discover how much of a smart arse or dumb arse we may be at any given time. FBALX is high on the list of balanced funds in it's category.
    FBALX has a 10 year annualized return of 10.83%. <<<

    An equivalent to the above could be a simple 50/50 of SPY and AGG (or BAGIX, a plain vanilla active managed AA bond fund); OR whatever percentage mix an individual wants to choose for these two. The rough math indicates a 50/50 mix of the above to provide about a +8.45% blended total return for the past 10 years and +6.95% over the past 15 years.

    My personal choice using AGG or BAGIX examples for bonds, would be the equity side into FSPHX or FSMEX for the 50/50 mix.

    We individual investors find ourselves at an unfamiliar place recently, relative to the AAA bond sector. Although we have BAGIX as part of our portfolio, I/we don't know how much support/ballast will arrive during a greater than -20% equity dive, although I still feel central banks and large investment organizations would still run to AAA bonds during an equity melt.

    NOTE: 50/50 of SPY (or an index) and AGG = -.4% YTD, VWINX = -.25% YTD and FBALX = +2.3% YTD.

    I think your sister could have a decent risk and reward blend of no more than 3 holdings among bonds and equity to satisfy a meaningful performance portfolio.

    Lastly, retirement finds too many variables for individuals/couples. If monetary needs are satisfied for the normal expenses, one's investments should still include equities, IMHO. Forty years of favorable bond returns are at a new place right now; and I surely don't know the forward road in this sector for a fully buy and hold portfolio.

    Take care,
    Catch



  • edited March 2021
    FBALX is a GREAT fund that I've owned for as long as I can remember but it pushes the envelope of a 50%-70% AA fund. YBB has noted recently that it at times acts like an aggressive growth fund. That, and its steller mgmt team, are likely some of the causes of its outperformance in its category.
  • edited March 2021
    I don't know if you deem an allocation fund with slightly less than 50% stock exposure to be conservative.
    If you do and are investing in a taxable account, you may want to consider VTMFX.
    At least 50% of the fund's assets are allocated to munis so that investors can benefit from their tax-advantaged distributions.
  • sma3 said:


    Can anyone suggest a source for data on major fund families allocations for the income phase of target date funds so I can run an MFO comparison for her?

    If you have MFO premium there are all kinds of things to screen on. I can't think of a better source.

  • Agree. As a subscriber to MFO premium, it has been extremely useful to analyze MFs, ETFs, and closed-end funds.
  • edited March 2021
    Sven said:

    Agree. As a subscriber to MFO premium, it has been extremely useful to analyze MFs, ETFs, and closed-end funds.

    Your question was very specific. Were you able to get an answer out of MFO Premium? I would have to ask Charles B. for help before even trying. I forgot that part in my hasty post yesterday.

    Or, have you found any other resource that would give that sort of quick-and-dirty breakdown?

    I have been going through dividend funds wondering how to screen out those that invest in REITS.

    Later that morning . . .

    Another DOH! moment. Obviously I thought I was responding to the original poster. Well. Because Sven looks so much like sma3.
  • Not recommending this to anyone, I am in NO position to do that, not a financial advisor, I don't know you, just posting for entertainment purposes, blah, blah...

    What I have been doing is phasing strongly into PMEFX, Penn Mutual AM 1847 Income Fund, run in part by a couple of fund managers who used to run BERIX (Berwyn Income Fund)

    Do like their past results, do like they are starting from a small asset base, have sat out for a year, likely due to non compete, like that as they likely have been doing their homework and formulating their strategy. Do like their stock portion, value, strong ROIC, balance sheets, div payers. Cipollini is articulate, seems like he has moxy, have seen him on some vid clips. Conservative to somewhat moderate approach? Younger guy too, likely going to be running that fund for some time hopefully, not dependent on one fund manager, looks like there are four managers.

    Me thinks, FWIW, some of those other funds listed on above posts are going to get hammered biggly when market goes down, might not happen right away but looking out in the future sure looks like we are biggly over valued right now.


    I've taken the monies out of TMSRX (too much black box, swaps, got small burn in IQDAX, could have been a lot worse if that happened several months ago) and into this fund.

    Avail at Schwab.

    Good Luck and Good Health to All,

    Baseball Fan
  • @Baseball_Fan : Thanks for playing ball ! I'll take a look see.
    Stay Safe, Derf
  • edited March 2021
    Thanks @Baseball_Fan for the candid appraisal. Always good to remind folks that these are our considered opinions - not advice. Everybody’s situation is different, and without having all the nuts & bolts of their situation, it’s hard to give advice.
    Derf said:

    ”Thanks for playing ball!”

    @Derf - Odds-makers strongly favoring Dodgers over KC tonight (exhibition game).:)

    House Bill 4916 legalized sports betting, both retail and online, in the state.

    From article - “These new online platforms are certain to boost Michigan’s gambling economy ...”


  • What I have been doing is phasing strongly into PMEFX, Penn Mutual AM 1847 Income Fund, run in part by a couple of fund managers who used to run BERIX (Berwyn Income Fund)

    Baseball Fan

    I’m watching PMEFX but looking to put in a decent chunk because of the TF each transaction would incur at Schwab.

  • beebee
    edited March 2021
    After years of accumulating a retirement nest egg using exclusively low cost, well diversified Target Date Funds, determine your income needs and allocate a portion of your portfolio to meet those income needs. Your Target Dated Fund (now very conservative) could be your funding source (4% rule).

    Slowly recast these funds out on the Target Date spectrum towards a higher equity weighting. This allows part of your portfolio to slowly move into a higher weighting in equities as you age and help avoid sequence of return risk early in retirement.

    Should Equity Exposure Decrease In Retirement, Or Is A Rising Equity Glide path Actually Better?
    Yet the research shows that rising glide paths can be so effective, they may actually lead to lower average equity exposure throughout retirement, even while obtaining more favorable outcomes. And ironically, it turns out that for those who do want to implement a rising equity glide path, the best approach might actually be to explain it to clients as a bucket strategy in the first place!
    should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better
  • edited March 2021
    Here is M*'s fund screener. Check the drop down box for "allocation" types. Once the funds populate, you can click the arrows under YTD return to sort from high to low or low to high.

    https://www.morningstar.com/funds/screener-rank
  • edited March 2021
    Re @bee’s above comments...

    We kicked this concept around here roughly a decade ago. I thought than it was totally WACKO.

    In hindsight, it would appear to me anyway that if a retiree is able to protect & grow his / her nest-egg during the crucial first decade following retirement, than (depending on circumstances) that person might be in a somewhat better position to assume greater market risk later on. Perhaps mentioned already - but if home equity has grown substantially over those years, it’s also an argument for taking on a bit more market risk.

    Why is the first decade so important? Because a large % loss than might prove more devastating than were it to occur later on after (1) net worth had increased appreciably and (2) life expectancy had decreased. All depends ...

    I never liked glide-paths and have assiduously avoided funds that incorporate them. Fine for people who pay little attention to markets and investing. But I’d rather have the ability to add or pull back on market exposure than to venture down the one-way street glide-paths seem to lock one onto. The experience in 2007-9 and to some extent in early 2020 demonstrate the advantage of being nimble rather than locked in.
  • @hank AND @Derf: here in SE MI we are deluged with offers of "free" cash for use on the newly legalized online gaming sites. I love sports, but have never considered waging on them. I'm probably out of it as evidenced by my failure to hear anything on the Grammy awards show that resembled music.
  • edited March 2021
    BenWP said:

    @hank AND @Derf: here in SE MI we are deluged with offers of "free" cash for use on the newly legalized online gaming sites. I love sports, but have never considered waging on them. I'm probably out of it as evidenced by my failure to hear anything on the Grammy awards show that resembled music.

    @BenWP - Don’t blame @Derf for my subtle hijacking of the thread. Maybe we’ll get around to discussing Michigan’s and other states’ legalization of online sports betting in the OT area. It’s certainly a 2-edged sword. I’d like to say in self defense, however, that I only gamble on days when the stock market’s closed.

    :)
  • ...my failure to hear anything on the Grammy awards show that resembled music.

    Remember: The "C" in "Rap" is silent. And the rest of it just sounds like techno-percussion with words that are ALMOST enunciated fully enough to be understood. Like listening to Van Morrison on Quaaludes.
    (Sorry, I just HAD to chime in.)
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