The single-fund solution works for most plan participants. But for those who are more informed and engaged, adding a satellite investment on top of a TDF isn’t necessarily a mistake.
Conventional wisdom doesn’t always hold up when you look at the data. You don’t have to drink 8 glasses of water a day, and inefficient markets don’t make it easier for active managers to outperform.
Active investment managers are like major league baseball players. Both are capable of producing towering home runs or disappointing strikeouts. And when it comes to investing, consistent singles and doubles may add up to scoring runs over time.
Michael Palazzi, senior DC investment strategist, Vanguard Defined Contribution Advisory Services, shares how a “vanilla” TDF portfolio construction can be the best option for plan participants.
In this year’s Berkshire Hathaway shareholder letter, Warren Buffet singles out the long-term positives of low-cost investing, and the role Vanguard’s founder has played in making low-cost investing so widely available.
A negatively yielding investment would seem to have no place in anyone’s investment portfolio. But there’s a sound reason why an allocation to international bonds—some with negative yields—is fundamental to Vanguard Target Retirement Funds.
The mischief and merriment we associate with Thing One and Thing Two offer a lesson for retirement plan sponsors: People counting on defined contribution plans need to get only two things right.