Here is a quick snapshot of the fundamentals of the index, as well as the ETF itself. non-personal) investing questions and issues, investing news, and theory. The Total World versions are not the same as Total US + Total International. The object during retirement is to not run out of money, not maximizing growth. According to the Vanguard web page linked below, it has AUM (Assets Under Management) of $16.3 billion. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive. a rebalancing of the components at the beginning of each year (at every January 1st). Please disable your ad-blocker and refresh. Investing in broad-market (MF or ETF) indexes, diversified between equities and fixed income. and our thinking of moving my bond assets from BND (total bond) to BNDW (total world bond). If you're a more frequent trader, there's a case to be made that going with the pair of bond ETFs over BNDW is more cost effective. It earns a Morningstar Analyst Rating of Gold. Here's a list containing the Best Classic Portfolios, with the highest returns over 30 Years and Very High Risk categorization. Instead of the usual boglehead template of 33% each for VTI, VXUS, and BND, I am thinking of simplifying diversifying it by having a 2-fund portfolio, allocating it in 75% VT and 25% BNDW. It might mean an actual bond, whether treasury or municipal. John C. Bogle: Simplicity is the master key to financial success.". It's pretty small potatoes so I don't mind the tax hit for this one occasion. Active managers want your money - our advice: keep it! For more information, please see our Finally, it might be as simple as a CD. VT and BNDW vs. 3-fund portfolio? If you compare two portfolios during the withdrawal phase, 60/40 and 100% equities, the 100% equities will run out of money sooner because of the bad market conditions from 2000-2010. Vanguard Total World Stock Index offers unrivaled diversification. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. The Bogleheads Wiki: a collaborative work of the Bogleheads community, Local Chapters and Bogleheads Community. If you were to look at the Vanguard advisors page for VT, you would quickly note that it has 8,110 holdings as of 3/31/19. Then will be increasing BNDW as I age. for Seeking Alpha, all the way back in June 2015. Post Privacy Policy and Hmm let's have a look, shall we? Scan this QR code to download the app now. Any thoughts on this move? For readers interested in a more in-depth look at VXUS, I recently covered it as my #1 recommendation to fill the allocation to international stocks in my suggested 'perfect portfolio' for the next 10 years. slothritis 2 days ago Muni National Intermediate-Term Bond ETFs. Jack founded Vanguard and pioneered indexed mutual funds. First off, I just want to make one simple point. When it comes to portfolio building, I'm a big believer that simpler is better. Why not just use Schwab's ETFs instead? Press question mark to learn the rest of the keyboard shortcuts. Above, I featured VTI as the subject of my very first article for Seeking Alpha. Today, we're going to focus on simplicity. With VTI + VXUS and BND + BNDW, you control it. If you are interested in getting periodic income, please refer to the Bogleheads Four Funds Portfolio: Dividend Yield page. As noted at the outset of this article, using a VT/BNDW combination, one could effectively own virtually every stock and bond on the planet for 9 basis points! Unlock our full analysis with Morningstar Investor. As the world economy evolves into the 2020s and we begin to eventually move past the current period of COVID impacts and central bank easy money policies, the more diversified nature of VT will be important to reducing portfolio risk. The Bogleheads Four Funds Portfolio is a Very High Risk portfolio and can be implemented with 4 ETFs. An immediate annuity might also be an option. We sell different types of products and services to both investment professionals and individual investors. It linked an April 26 announcement from Vanguard featuring their latest ETF fee cuts. According to Morningstar, the fund has 17% of assets in mid-caps and just 4% in small-caps. It then became 1 of 3 ETFs in. by 000 Sat Nov 21, 2020 9:56 pm, Post Here is a quick snapshot of the fundamentals of the index, as well as the ETF itself. I personally wouldnt unless I had 25-33x annual expenses saved up. Given what's happening globally with the COVID pandemic and many economies being artificially propped up by mountains of central bank stimulus, I think having a bond position that's dominated by notes in that A-rated to AAA-rated range is a good thing. Check this out, from the BNDW promotional brochure. I have a taxable brokerage account with some individual stocks I'd like to sell in exchange for VT/BNDW in an 80/20 split. Its an extreme example of Sequence of Returns Risk in drawdown phase, but you have to be prepared for the worst because theres typically not much you can do to make more money when you reach 80-85 years old. Any thoughts on this move? by rkhusky Sun Nov 22, 2020 7:25 am, Post It consists of 50% allocations to the Vanguard Total International Bond ETF (BNDX) and the Vanguard Total Bond Market Index ETF (BND). There are two problems though. Reddit and its partners use cookies and similar technologies to provide you with a better experience. We cant predict what will do best in the future but it is well established that the role of bonds for stability in the portfolio is crucial once you are withdrawing from it instead of contributing. How? Buy, hold, rebalance, and stay the course! That's why people suggest owning both in old age. No guarantees are made as to the accuracy of the information on this site or the appropriateness of any advice to your particular situation. Buy, hold, rebalance, and stay the course! What about my BND/BNDX combination as a substitute for BNDW? VT BNDW. Additional disclosure: I am not a registered investment advisor or broker/dealer. by jhfenton Wed Feb 13, 2019 12:51 pm, Post You can stay within Vanguard and target the Vanguard Real Estate ETF (VNQ) if you want to up your allocation to this sector. Bogleheads Four Funds Portfolio data source starts from January 1985: let's focus on monthly and yearly returns. Press question mark to learn the rest of the keyboard shortcuts. Between the two ETFs, a total of 10,093 holdings. That kind of above average growth/below average valuation combination is something you want to keep in your portfolio. As a result, I am of the view that many investors would be more than happy with this weighting, if not eliminating international bonds altogether. As another beneficiary of Vanguard's most recent round of fee cuts, its expense ratio is now .04%. For some, that means BND or BNDW. by tj Sat Nov 21, 2020 9:34 pm, Post But I want to narrow in on two ETFs specifically, a pair in which when put together can provide you a fully diversified portfolio (well, almost, but we'll get into that in a bit) that's about as simple as it gets. Total Bond Market Fund (VBTLX) is uncorrelated with the stock market (due to short-term and corporate bonds), but will have similar returns to intermediate-term treasuries (due to the intermediate-term and long-term bonds). Please can someone explain the 3 fund portfolio to me? Heres your answer in a backtest to demonstrate the point. Vanguard's fee on VT just cut to .09%, BNDW already at .09%, good to go. by retiredjg Wed Feb 13, 2019 1:25 pm, Post I'm just wondering if this is a good choice of funds for a taxable account going forward? I had a couple of extra minutes on a lazy Saturday afternoon, so I checked my Twitter feed. If you look closely at the relative weightings, I don't believe that this is at all a fantastical example. But now we come full circle to the actual title I selected for the article, in which I posed 6 basis points as the target. Here is the wording as presented in the summary prospectus for BNDX. , 30Y: 2.49%. With more than 2,500 different funds to choose from today, the ETF marketplace makes it simple to build a portfolio as simple or as complex as you'd prefer. BNDW streamlines fixed income portfolio construction by investing in a combination of Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX). Vanguard, as most of you are already well aware, is the industry's low cost leader. VTI was the subject of the very first article I wrote as ETF Monkey for Seeking Alpha, all the way back in June 2015. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. BNDX is the newest of our 4 ETFs, with an inception date of 5/31/2013. I really couldn't say if this explains it fully or not. I have no business relationship with any company whose stock is mentioned in this article. 70/30 AA for life, Global market cap equity. Correlation measures to what degree the returns of the two assets move in relation to each other. ETFdb.com lists it as the world's 3rd-largest ETF. How do you define diversification? Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.. For additional financial information on Vanguard Marketing Corporation, see its Statement of Financial Condition: Audited and Unaudited Aggregate Float Adjusted Index. I did not find "high" percentages of cash in the Schwab ETFs or mutual funds I looked at (I only looked at a few). Reddit and its partners use cookies and similar technologies to provide you with a better experience. Just buy the Schwab ETFs in the proper ratios to create your own target date fund. It's a little light on real estate and there are no junk bonds to speak of. My professional background is in the finance area. Put succinctly, Vanguard is attempting to, as closely as possible, give you the actual return from those foreign bonds in U.S. dollars. Being the curious guy I am, I wondered: Could one do even better? I would argue that perhaps I'd prefer a little less exposure to government-issued debt and more to corporate bonds than what BNDW currently offers, but for a core long-term holding, I still think it's acceptable. How? In 2022, the Bogleheads Four Funds Portfolio granted a 2.25% dividend yield. BNDW is actually just a fund of Vanguard funds. VXUS tracks the performance of the FTSE Global All Cap ex US Index. An investment of 1000$, since March 1993, The person who retired in the year 2000 with $1M, a portfolio that was about 60% VT and 40% BNDW, and using the 4% rule of thumb to withdraw $40,000 per year (inflation adjusted) has seen their portfolio hold steady and even grow a little by now and they should be relatively safe to keep withdrawing into their sunset. Target Date Retirement fund. Wed like to share more about how we work and what drives our day-to-day business. Nothing more. According to the Vanguard web page linked below, it has AUM (Assets Under Management) of $11.8 billion. Reddit and its partners use cookies and similar technologies to provide you with a better experience. Discuss all general (i.e. by jarhead1 Thu Apr 15, 2021 10:53 am, Post There are also likely to be differences in exact allocations wrt market cap, UK vs Japanese bonds, etc, but I wouldn't expect that to make as large a difference. Investing involves risk, including the loss of principal. , 5Y: 3.74% : Bogleheads 1 Posted by 20 days ago VT/BNDW in taxable account? Bogleheads are passive investors who follow Jack Bogle's simple but powerful message to diversify and let compounding grow wealth. Roth is a name, not an acronym. VTI has an inception date of 5/24/2001. by Register44 Sun Nov 22, 2020 12:06 pm, Post I really like your comment because of the insight on negative correlation, but am still learning about the pros/cons of different types of US Treasuries. Post Such hedging is intended to minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar. Press J to jump to the feed. If you have never considered including international bonds in your portfolio, the article also takes a fairly in-depth look at the question of why you might want to do so. Of course, you can use any of the more targeted Vanguard ETFs to tilt your equity allocation one way or the other (e.g. and our If you have the time and the interest, there's certainly nothing wrong with a little more complexity by adding individual dividend, sector and thematic ETFs to the mix, but for most of the people who don't follow the financial markets on a regular basis, it can be a bit overwhelming. Instead of 40% BNDW, maybe it should be 60% VT and 40% "safer stuff". ETFdb.com lists it as the world's 51st-largest ETF. Last edited by KyleAAA on Wed Feb 13, 2019 5:13 pm, edited 2 times in total. by Register44 Sat Nov 21, 2020 9:52 pm, Post Im new to investing kinda and I dont know. Cash would count toward the 40%. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. Have a look at the graphic below. 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Are interested in getting periodic income, please see our Finally, it has AUM ( assets Under Management of! And individual investors might mean an actual bond, whether treasury or municipal answer in a backtest to the! Taxable account newest of our 4 ETFs I do n't believe that this is at all a fantastical.. A fund of Vanguard 's most recent round of fee cuts, its expense ratio is now %! Yearly returns first article for Seeking Alpha our thinking of moving my bond assets from BND ( total ). A lazy Saturday afternoon, so I checked my Twitter feed at all a fantastical example to diversify and compounding!