Again comparing a 100/0 fund (VTSAX) against a 50/50 fund (VTMFX) is really invalid. If you weren't worried about tax-efficiency, then an equivlent to VTMFX would be 50% VTSAX and 50% VTBLX and together those two funds total performance overall would have been similar to VTMFX in 2000-2010, while looking only at a single component (VTSAX) gives a skewed perspective....my issue with VTSAX is that given the cape ratio and my gut feelings about 2000-2010 when the market went nowhere, VTMFX had a decent showing and healthcare even more so. I don't want to deal with zero returns given my age and there is no reason to think that won't happen again given multiples and steepening of the yield curve which so many have said that it doesn't matter anymore. Hence, my thoughts on XLV as an alternative.
The point I'm trying to make is that you should have an asset allocation (AA) for your entire retirement portfolio, don't focus on individual components' performance, just manage the risk through gradual shifts to AA as you age and by annual rebalancing to stay on course.
A tax-efficient addition to Taxable is a pure stock fund like VTSAX, including a shift in a Tax-Deferred account from stocks to bonds to maintain your overall AA. Alternatively, it's easy to simply add more to VTMFX. It's probably best to view your portfolio across all accounts and holdings to see how well it meets your desired AA, rather than focus on the past performance of some particular holding(s). You can always find one thing that outperformed something else, so you should expect that not all of the funds making up your AA will all perform equally. That's by design so that when you do annual or threshold rebalancing, you are passively "buying low and selling high." Actively trying to predict which investments will outperform based on past performance generally does not pan out (except for Buffet, Koltrones, etc.).
Keep it simple.
"Simplicity is the master key to financial success." -- John C. Bogle
Statistics: Posted by bonesly — Fri Jul 26, 2024 5:22 pm