Plus, two recently launched high-yield bond ETFs for passive and active investors.<\/p>\n
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Hampton: Vanguard has recently partnered with TIAA to launch a target-date fund series with guaranteed income. Can you talk about that?<\/p>\n
Sotiroff: The guaranteed income is really coming by way of an annuity, which is sort of an insurance contract that gives you this regular payment. I think most people are kind of familiar with the concept. What this would look like is there\u2019s an option for investors in a target-date fund to annuitize some or all of that target-date fund\u2019s assets when they get to retirement. It\u2019s new to Vanguard, I should say, but not really new to target-date funds. Some of their competitors have solutions like this already out there with varying degrees of flexibility. Safe to say it\u2019s pretty cheap, Vanguard being Vanguard. So, why do this? I think it\u2019s kind of a smaller step toward that bigger question of how to turn an investment portfolio into a paycheck, which is a really, really difficult question to answer for a lot of people.<\/p>\n
I don\u2019t know if there\u2019s a great answer. It\u2019s one of the hardest problems in finance to solve because everybody\u2019s a little bit different. Everybody has different savings, different life goals, et cetera. It\u2019s tough, but it\u2019s kind of a baby step. It\u2019s a small step toward trying to solve that problem. The other thing I\u2019ll say is this would be a new target-date series. It doesn\u2019t sound like Vanguard is going to mess with its current target-date series. It\u2019s very successful. It\u2019s got hundreds of billions of dollars in it, so I don\u2019t think they want to do too much with that there. It\u2019s working very well for the people that are in it. The other thing here is I\u2019m under the impression that this is going to be available as a collective investment trust, or a CIT. It\u2019s not going to be in mutual fund format, so that limits it to large 401(k) plans, that type of thing, which is really where it should be used, I think. That\u2019s just some of the additional details around there that we\u2019ve learned.<\/p>\n
Hampton: Now, Vanguard\u2019s also collaborating with Wellington and Blackstone to combine public and private assets into multi-asset investments. What do you make of this, and does this fit in Vanguard\u2019s mission?<\/p>\n
Sotiroff: Vanguard\u2019s role so far has been pretty passive, to pardon the pun. The fund is actually going to be managed by Wellington, at least talking about the WVB All Markets Fund. It\u2019s basically supplying the publicly traded stocks and bonds to this multi-asset portfolio that\u2019s also going to hold some private equity and some private credit. I think the fees came out on those. I don\u2019t have them readily available off the top of my head. It\u2019s also hard to compare fees because each one of these types of funds that comes out is slightly different in terms of what it\u2019s doing and the asset exposure that it has. It\u2019s hard to compare apples to apples and say one is cheaper than the other, but I think your other question is fair. Does this fit with Vanguard\u2019s mission?<\/p>\n
This one I\u2019m OK with because again, it\u2019s a Wellington fund. They\u2019re not really doing a whole lot in private assets. I think the bigger picture here is that it sort of opens the door for Vanguard to maybe start exploring private assets. There\u2019s problems that come with that. I think private investments have gotten a bad rap, and rightfully so, because the fees are high and they\u2019re very complicated. We\u2019re trying to figure out some of the fee structure and these things, and it\u2019s very difficult to do. I think Jack Shannon has written on that. Bryan Armour, I sit next to him; he rants about it every once in a while. There are also a lot of questionable practices about how the assets in these things are valued. There are a lot of question marks about how these funds are just way too stable given what they hold. There are a lot of things there.<\/p>\n
Now that said, there\u2019s a lot of room for disruption. There\u2019s a lot of just bad practices going on in that side of the industry. I think that\u2019s potentially an opportunity for Vanguard if it chooses to get in there. Some of those problems are really difficult to solve, and they\u2019re really thorny, but if they could figure that out and give investors who actually want that type of exposure a better, cheaper, more cost-effective ride, that could potentially fit into their mission. Now, this isn\u2019t going to be for everybody. It\u2019s not something that I think is going to fit into everybody\u2019s portfolio, but we\u2019ll see. I don\u2019t want to be rushing to judgments here. We still have to kind of see what they come out with. We know they\u2019re working on some things in the background, so I\u2019ll save my judgments for when we learn more. <\/p>\n","protected":false},"excerpt":{"rendered":"Ivanna Hampton: Vanguard is evolving as it grows bigger while keeping its investor-first reputation intact. Investing Insights recently…\n","protected":false},"author":2,"featured_media":627004,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-627003","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/627003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=627003"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/627003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/627004"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=627003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=627003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=627003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}