The math isn’t something you can do in your head, so you’d probably need to build a custom spreadsheet to make the calculations. None of the Vanguard asset allocation ETFs use that mix, so if you added one of them to your portfolio you would need to adjust the weight of your existing ETFs to compensate. You could simply ignore that holding and rebalance as you did before, confident that VBAL will look after itself.īut things get more complicated if your target is, say, 50% fixed income and 50% equities. This would probably be manageable if your target asset mix matched one of Vanguard ETFs exactly: if you already use a mix of 40% bonds and 60% stocks, then adding VBAL to your portfolio would not complicate your rebalancing too much. RELATED: Stocks to help you achieve your financial goals Now, with all of your new contributions going to a single balanced ETF, the rest of the portfolio might need more frequent attention.
That might have allowed you to avoid selling anything to rebalance. During periods where stocks performed well, you could have added your new contributions to your bond ETF-or vice versa.
In the past, you were probably able to keep your portfolio in balance simply by adding new money to whichever ETF was furthest below its long-term target. In fact, you might need to make even more trades now. If you invest only your new money in the asset allocation ETF and hang on to all of your existing holdings, your portfolio’s mix of stocks and bonds will still change as markets move, and from time to time you will still need to sell some of the winners to top up the losers. However, the need to rebalance does not disappear if you use the new Vanguard ETFs for only part of your portfolio.
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RELATED: How to boost your returns in retirement So, Marty, I can see why these one-fund solutions are attractive compared with owning a portfolio of multiple ETFs you need to rebalance yourself. Whenever its allocation drifts too far from those targets, the fund manager will rebalance, which makes these products virtually maintenance-free for the investor. Other ETFs in the family are more conservative (40% equities) or more aggressive (80% equities). Each of the three new funds holds seven underlying ETFs covering the global stock and bond markets in various proportions.įor example, the Vanguard Balanced ETF Portfolio (VBAL) has a target of 40% bonds and 60% equities. In 2018, Vanguard launched a family of asset allocation ETFs, which allow you to build a diversified portfolio with a single product. Can you advise on how I should be rebalancing if I don’t intend to get rid of my other ETFs?Ī. I have a portfolio of several ETFs, but I’m thinking of buying one of the new Vanguard asset allocation ETFs from now on.
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