Vanguard’s Reconstitution of its Target Date Funds Suggests Further Shift in G.A.I.T.

Vanguard stated its intention to increase the international equity exposure of its target retirement funds, LifeStrategy Funds, and STAR Fund from approximately 20% to approximately 30% of the equity allocations. The proportion of domestic equities in these funds will be reduced proportionally for the overall allocation in stocks to remain consistent.

As we reported in Q3 2009, Fidelity similarly elevated its international equity positions to a comparable level (as well as adding TIPS and commodities to its target date offerings). As two of the most prolific providers of retail investment products, these recently announced changes evidence of a meaningful evolution in Generally Accepted Investment Theory (G.A.I.T.) by incorporating a larger allocation to international assets.

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