The Rob Berger Show RBS 189: These Fidelity Funds Beat a Vanguard 3-Fund Portfolio (FQF)
Feb 14, 2025
In this engaging discussion, the host examines whether Fidelity funds can outperform a Vanguard three-fund portfolio, revealing surprising results since COVID. The intricacies of fund-of-funds expense ratios are unpacked, alongside insights on DIY approaches to target-date funds. A thought-provoking look at the 4% withdrawal rule suggests potential for higher rates later in life. Finally, the debate around Vanguard's new 40/60 allocation recommendations raises essential questions about portfolio composition and retiree income strategies.
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Active Allocations Can Outperform Passive Mix
- Actively managed Fidelity balanced funds outperformed a Vanguard-style three‑fund portfolio over the sample period.
- The outperformance likely came from higher large‑cap exposure and shifting allocations since COVID.
Active Funds Shift Allocations Over Time
- Active funds' allocations shift over time, so historical comparisons can be misleading if asset mixes changed.
- Rob Berger found Fidelity funds' higher large‑cap weight likely explains recent outperformance.
Calculate Fund‑Of‑Funds Convenience Cost
- Compare a fund‑of‑funds expense ratio to building the same mix yourself to see if the extra fee is worth it.
- Treat the difference as payment for convenience like rebalancing and decide if that cost is acceptable.