Target Retirement Funds Face-off Past Performance: Vanguard vs Fidelity vs T Rowe Price

Following are past return and volatility numbers for the 2030 and 2005 funds from each of the three mutual fund companies. As you can see, the Vanguard fund has delivered superior returns with lower volatility for most time periods on record. That doesn’t automatically make it the best fund, however: Vanguard’s more conservative asset allocation has served it well in a troubled market. The other companies’ more-aggressive positioning may pay dividends in future bear markets.

Return figures reflect closing prices on 11-30-2008

Face-off: 2030 Target Retirement Funds

Unfortunately, 3- and 5-year data isn’t available for Vanguard’s offering so we’ll leave that out of this analysis; however, taking its asset allocation into consideration it would have slightly out-performed both Fidelity and T Rowe Price over that period (roughly). 1-year figures tell a different story with Vanguard handily out-performing the competition. This is due in part to its rock-bottom costs and broad market indexing philosophy but mostly to its more-conservative asset allocation. Additionally, both Fidelity’s and T Rowe Price’s portfolios differ in key ways from the broad market, to their detriment. During prolonged bull markets, you might expect Fidelity and T Rowe Price to fare better due to their more aggressive asset allocation; however, Vanguard’s huge cost advantage may be too much to overcome.

5-Year Data:
Vanguard: Not Available
Fidelity: -1.73%
T Rowe Price: -1.26%
3-Year Data:
Vanguard: Not Available
Fidelity: -9.71%
T Rowe Price: -10.07%
1-Year Data:
Vanguard: -36.42
Fidelity: -40.45%
T Rowe Price: -41.36%

3-Year Standard Deviation:
Vanguard: Not Available
Fidelity: 15.53%
T Rowe Price: 16.32%

Face-off: 2005 Target Retirement Funds

Once again, Vanguard’s conservative philosophy wins the day: delivering superior returns with significantly less volatility. It’s too bad these funds don’t have 10 year records because it would be interesting to see how things would have worked out over two full economic cycles from boom to bust and back again.

5-Year Data:
Vanguard: 1.46%
Fidelity: -0.42%
T Rowe Price: Not Available
3-Year Data:
Vanguard: -1.59%
Fidelity: -5.24%
T Rowe Price: -3.88%
1-Year Data:
Vanguard: -18.97%
Fidelity: -27.63%
T Rowe Price: -25.45%

3-Year Standard Deviation:
Vanguard: 7.81%
Fidelity: 10.04%
T Rowe Price: 9.72%

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