I previously wrote about how the Vanguard Balanced Index Fund was a good example of the benefits of holding both stocks and bonds in your portfolio. Now, I’d like to extend this and compare the Vanguard Balanced Index Fund (VBINX) with another veteran balanced fund, the Vanguard STAR Fund (VGSTX). They are similar yet different:
Vanguard STAR Fund (VGSTX) |
Vanguard Balanced Index Fund (VBINX) |
|
Overall Asset Allocation | 60% Stocks 40% Bonds |
60% Stocks 40% Bonds |
Expense Ratio | 0.34% | 0.24% (0.10% Admiral shares) |
Geographic Exposure | Both US and international stocks, US bonds only | US stocks only US bonds only |
Investment Style | Actively-managed, 11 underlying funds |
Passively-managed, cap-weighted index |
10-year annualized returns (as of 6/30/2013) | 7.22% | 6.86% (6.98% Admiral shares) |
Here’s a chart of how $10,000 invested 10 years ago would have done. With the Vanguard STAR fund, you’d have $20,653 today. With the Vanguard Balanced Index fund, you’d have $19,749. (This is with Investor shares, which have a lower minimum investment than Admiral shares. The minimum used to a lot higher, but now it is $10,000 for Admiral shares.)
My observations: