It seems that many responses to this thread bemoaning PAS' "lack of flexibility" are reflective of disagreement with Vanguard's investment philosophy. PAS portfolios are managed with reference to Vanguard's Capital Markets Model, which is built by Vanguard's Investment Strategy Group. The Model forecasts likely long-term total returns; it is a proprietary financial simulation tool which looks at U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, commodities, and certain alternative investment strategies.
The model currently predicts greater returns for global equities over U.S. equities over both 10 and 30-year periods. That likely accounts for Vanguard's position with regard the the presence of int'l equities in portfolios.
Any given PAS client's portfolio will be managed with Model forecasts in mind, taking into account additionally individual client risk tolerance, goals, outside income, outside investments, and time horizons. As a result, some portfolios consist of more than three funds, and some include actively managed PAS-exclusive funds which became optionally available to clients for whom such investments may be appropriate. Qualified clients are offered access to private equity investments which further diversify portfolios and potentially improve returns. So it is not the case that all PAS portfolios are identical.
If a particular client wants to disregard the Model, and construct a portfolio which conforms instead to their personal preferences, they probably are not suited to PAS and should seek out advisors more amenable to following client instructions for portfolio construction in lieu of reliance on Vanguard's research and modeling. Only time willl tell whether the PAS portfolio or the individually directed portfolio will provide better risk-adjusted returns after fees, but I suspect many PAS clients are betting on Vanguard.
The model currently predicts greater returns for global equities over U.S. equities over both 10 and 30-year periods. That likely accounts for Vanguard's position with regard the the presence of int'l equities in portfolios.
Any given PAS client's portfolio will be managed with Model forecasts in mind, taking into account additionally individual client risk tolerance, goals, outside income, outside investments, and time horizons. As a result, some portfolios consist of more than three funds, and some include actively managed PAS-exclusive funds which became optionally available to clients for whom such investments may be appropriate. Qualified clients are offered access to private equity investments which further diversify portfolios and potentially improve returns. So it is not the case that all PAS portfolios are identical.
If a particular client wants to disregard the Model, and construct a portfolio which conforms instead to their personal preferences, they probably are not suited to PAS and should seek out advisors more amenable to following client instructions for portfolio construction in lieu of reliance on Vanguard's research and modeling. Only time willl tell whether the PAS portfolio or the individually directed portfolio will provide better risk-adjusted returns after fees, but I suspect many PAS clients are betting on Vanguard.
Statistics: Posted by GmanJeff — Sat Jul 27, 2024 12:40 pm — Replies 46 — Views 5407