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  1. Reginald

     /  December 3, 2017

    A few issues however:

    1. Internal rebalancing can result in unwanted CGT. Fine if in Pension mode but less so for Accumulation.
    2. Vanguard periodically change asset allocation based on their forecasting model. What you sign up for initially may change to an unsuitable allocation. Major changes occurred recently.
    3. An investor may want to change their asset allocation as they get older eg to more conservative. The product has no flexibility to do this.
    4. If one needs to sell units to fund pension it results in all asset classes effectively being sold which may include shares during a crash. That is the Shares would be sold at the worst possible time.

    Of course the impact of some of the above especially in relation to CGT will depend on whether in accumulation (part / full) or Pension mode.

    Ideally best to invest in separate asset class ETFs eg VAS, VGS, VGB etc. Rebalance relevant asset class with new cash in accumulation. Sell outperforming asset class for income in retirement. Potentially better tax outcome, performance and greater control and flexibility over asset allocation.

    Trouble is the above would appear a better alternative if behavioural issues didn’t play such an important role in investing. In which case some investors would likely do better being in a Vanguard Diversified ETF if for no other reason to protect them from themselves!

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