Just wanted to get the opinion of the board. Lets say you had a choice Target Date Fund (Vanguard) vs. Total Stock Market Admiral Shares Fund (Vanguard)... what do you select? Pro's vs. Con's?

My Thoughts: Target Date Fund theoretically gets you diversification with minimal fee's. vs. Total Stock Market Fund, has less fees, and do not kill me for saying this, but over the long term tends to outperform the target date fund. Also, given the current yield curve, is having any exposure to bonds that great of an idea?

Be curious to hear opinions on this as well. We have target date funds as options in our 401k but I have ignored them to date primarily because I can't track them in Quicken.

I use fidelity cobtrafund in our rot accounts. Don't like target date funds. They go against Graham's philosophy.

I plan on starting to change my current $5500 in the 2055 target fund to a three fund portfolio in the coming months/years

Why not put some in the total market fund and some in the total bond fund? Adjust your percentages as you see fit.

The amount of debt exposure is dependent on the target date of the fund. Currently the Vanguard Target Retirement 2040 Fund (VFORX) has debt exposure of about 10% which isn't very much at all:
62.8% Vanguard Total Stock Market Index Fund(VTSMX)
27.0% Vanguard Total International Stock Index Fund(VTPSX)
8.2% Vanguard Total Bond Market II Index Fund (VTBIX)
2.0% Vanguard Total International Bond Index Fund (VTIBX)

Lots of investor dont like the retirement funds because the allocations are set for you and they don't like that old Ron Popeil sales pitch 'set it and forget it.' Many investors like to tinker with their allocations and many advisers tell you its better to take an active role in allocation and reallocation, but reallocation is a feature of target date funds. IMO, target date funds are somewhere in between active and passive investing.

Also, I'm pretty sure target date funds within a particular fund family use the same mutual funds to allocate, only the percentages change. It seems that there will likely be little difference between the portfolio holdings between the target date 2045 fund and the 2050 fund. Thus, there doesn't seem to be much advantage in allocating amongst multiple target date funds unless you make the target dates very wide (eg, 2015 and 2055).

[This message has been edited by tysker (edited 8/17/2014 12:23p).]

FWIW - Looking at the top 10 holdings of VTSMX (which is ~63% of VFORX) and Vanguard Total Stock Market (VTSAX) you find they are identical (AAPL, GE, GOOG, MSFT, JNJ, XOM, BRKA, etc)

Here was a thought I had this weekend. We all like diversification, but typically when stuff hits the fan the Correlations of your whole portfolio can become very close to 1. I am also concerned given the current yield curve, that any and all $ linked to a bond fund/bond index.. has a real propensity to loose at ton of $$$. But,... buying when the market is at an all time high isn't great either.

Apples and oranges.

Total stock market fund (vstmx) is actually just the us market. No bonds, no international, no international bonds, no inflation protected bonds.

Target date has all items listed above and is set to adjust percentages of each, becoming less risky each year until retirement, when the target date fund will dump into the target retirement fund (a great fund). Target funds diversify across all world stock markets and bond markets. Note that vstmx (us stock market) is the largest underlying fund within the target funds.

The target fund is a great way to invest for both a beginner and a seasoned veteran. Warren buffet always says "the s&p 500 will likely outperform whatever individual stocks you pick". I would say that the vanguard target funds are similar in terms of overall portfolio, meaning the target funds will outperform your mix-matched and always changing diversified portfolio over a long enough period.

Finally got around to my wife's Roth. Her account is invested primarily in FFFFX, Fidelity 2040 fund, .78% ER.

I guess I don't see the value in this diversification. It seems 'over diversified'. I'm thinking that I could cut down on the fees with a few funds/etfs and achieve the same diversification. AGG is a good total bond ETF. FSTMX - total US equity fund. FSGUX international equity. IEMG emerging markets ETF.

Domestic Equity Funds
65.86%

Fidelity Series Equity-Income Fund
9.81%

Fidelity Series Growth Company Fund
7.87%

Fidelity Series All-Sector Equity Fund
7.57%

Fidelity Series Growth & Income Fund
7.52%

Fidelity Series Blue Chip Growth Fund
6.54%

Fidelity Series Stock Selector Large Cap Value Fund
6.51%

Fidelity Series Opportunistic Insights Fund
4.92%

Fidelity Series Intrinsic Opportunities Fund
4.84%

Fidelity Series Small Cap Opportunities Fund
3.77%

Fidelity Series 100 Index Fund
2.31%

Fidelity Series 1000 Value Index Fund
1.28%

Fidelity Series Small Cap Discovery Fund
1.10%

Fidelity Series Real Estate Equity Fund
0.86%

Commodity Funds

Fidelity Series Commodity Strategy Fund
0.97%

International Equity Funds
26.83%

Developed Market Equity Funds
20.26%

Fidelity Series International Value Fund
9.13%

Fidelity Series International Growth Fund
9.12%

Fidelity Series International Small Cap Fund
2.01%

Emerging Market Equity Funds
6.58%

Fidelity Series Emerging Markets Fund
6.58%

Bond Funds
6.57%

Fidelity Series Investment Grade Bond Fund
0.51%

High Yield Bond Funds
4.41%

Fidelity Series High Income Fund
4.41%

Floating Rate Funds
0.51%

Fidelity Series Floating Rate High Income Fund
0.51%

Emerging Markets Debt Funds
0.67%

Fidelity Series Emerging Markets Debt Fund
0.67%

Real Estate Debt Funds
0.48%

Fidelity Series Real Estate Income Fund
0.48%

Short-Term Funds & Net Other Assets
0.74%

Fidelity Institutional Money Market - Money Market Portfolio - Institutional Class
0.43%

Fidelity Short-Term Bond Fund
0.25%

NET OTHER ASSETS
0.03%

I would switch out and invest in Vanguard (you will pay lower fees), .18%

https://personal.vanguard.com/us/funds/snapshot?FundId=0696&FundIntExt=INT