CAN I SIMPLIFY JtB BY BUYING A VANGUARD LIFESTRATEGY FUND INSTEAD?
JtB was introduced to SMI readers way back in May 1992. A few years later, Vanguard introduced new “LifeStrategy” portfolios that embodied the simplicity of JtB. There are four LifeStrategy portfolios, labeled Growth, Moderate Growth, Conservative Growth, and Income. While the exact composition of each fund varies somewhat, it’s reasonable to think of these as being roughly equivalent to JtB portfolios allocated 80%/20% stock/bond, 60/40, 40/60, and 20/80, respectively. The LifeStrategy portfolios have now been around for over eight years, and we have enough performance history on the books to say they’ve done their job quite well. Their performance has been quite similar to their JtB counterparts. In fact, more often than not, the LifeStrategy portfolios have managed to eke out a small margin of superiority. It’s not hard to explain why: their allocation to small company stocks is only about one-sixth that of Just-the-Basics. Small-cap stocks trailed the large company stocks found in
JtB was introduced to SMI readers way back in May 1992. A few years later, Vanguard introduced “LifeStrategy” portfolios that embodied the simplicity of JtB. There are four LifeStrategy portfolios, labeled Growth, Moderate Growth, Conservative Growth, and Income. While the exact composition of each fund varies somewhat, it’s reasonable to think of these as being roughly equivalent to JtB portfolios allocated 80%/20% stock/bond, 60/40, 40/60, and 20/80, respectively. The performance of the LifeStrategy portfolios has been quite similar to their JtB counterparts. The major difference between JtB and LifeStrategy portfolios is that JtB includes a much higher allocation to small-company stocks. This means that when small-cap stocks are performing well, JtB tends to outperform the LifeStrategy funds, and vice versa. Certainly, the LifeStrategy portfolios are an attractive, easier-to-administer alternative to JtB for those with the stock-to-bond portfolio allocations mentioned above (80/20.
