VSCGX did have a hard 2008. It was a different fund then, with 25% in an asset allocation fund (VAAPX) that could shift between 100% stocks and 100% bonds.
In 2008, VAAPX was (judging from its performance) completely allocated to stocks. It returned -36.39%, vs. the S&P's -37.00%, and vs. the -19.21% return of its blended (stock/bond) benchmark.
With a 25% allocation to VAAPX, it is not surprising that VSCGX underperformed its benchmark by 4.7% (close to 25% x 17.2% VAAPX underperformance).
To go back to 2008 is to look at two funds that no longer exist:
- a VSCGX fund holding anything other than total (stock or bond) market index funds, and
- VAAPX - a dynamic allocation fund that was merged into VBINX in 2012
2009 VSCGX prospectus for 2008 composition and performance/benchmark data
2009 VAAPX prospectus for 2008 data and for dynamic nature of fund
VAAPX 2012 prospectus supplement - completion of merger into VBINX

See my concluding sentence in the thread Seeking Suggestions for Vanguard Asset Allocation Funds: "Or even push it to a 30/70 fund (VTINX)."
This vanilla Vanguard fund of funds returned more than AOK over one day (YTD), one year (5.03% vs 4.37%), three years (9.46% vs. 9.20%), five years ( 6.78% to 6.66%), and 10 years (5.81% to 5.41%).
http://performance.morningstar.com/fund/performance-return.action?t=VTINX (compare with AOK)
Its volatility (std dev) was lower over three years (5.87% vs. 6.34%), five years (5.02% vs. 5.25%), and ten years (4.42% vs. 4.62%).
http://performance.morningstar.com/fund/ratings-risk.action?t=VTINX
The main area in which VTINX (or more generally, retirement income funds) falls short is tax efficiency. These funds are designed to generate income, and are thus not great in taxable accounts.
http://performance.morningstar.com/fund/tax-analysis.action?t=VTINX

OAKBX -22.03 loss in 1Q 2020 eliminates my interest in the fund-perhaps harsh on my part,but still!

VSCGX had a very difficult 2008-09 period compared to similars but did better in the 2020 1Q. Sticking to VG limits your Allocation category choices greatly although VG offers great balanced funds compared to peers IMO.

Given the limited number of other VG AA funds available, would you attempt to suggest
(1) any non-VG AA funds and if so, what would they be

My suggestion would be to check out FMSDX, a Great Owl fund with an excellent risk/reward profile that would also bring a significant element of diversification to the the portfolio.
Here is the latest data of FMSDX's composition:
Equities ex. Preferred Stock 46.54%
U.S. Treasury & Government Related Securities 17.75%
Investment-Grade Corporate Bonds 0.24%
Mortgage Backed Securities 0.01%
High-Yield Investments 14.70%
Bank Loans 6.23%
Convertibles 6.78%
Preferred Stock 4.52%
Emerging-Markets Debt 3.26%
Cash & Net Other Assets -0.03%
Good luck,
Fred

I've taken my small-cap fund down to almost nothing, at 1.62% of portfolio. Why hang on at all? It's a closed fund. PRDSX. ...Ah, but I see it's re-opened. OK. Still doesn't change the fact that I don't like the volatility. Over the past couple of days, I've been diversifying my BONDS. New positions in TUHYX and PRFRX. Money taken from PRSNX and RPSIX.

Gentle reminder: We will be reviewing markets, sectors, and fund families today using the MFO Premium tools, highlighting how each performed in 2021 and newest tool features along the way.

Thanks for the contribution to this thread. I tried to retrieve/search the T Rowe Price Report Fall 2004 article referenced without luck. Behind a wall. Wish I could find it. The article would give us more clarity and specific allocation holdings. However, I did notice the column headings from the 4/2021 article 1949-2013 study is using 20% equities 50% bonds and 30% cash producing the 6.8% annual number referenced. The Nov 2014 article used column headings of 30% Short (assume to be in error?) also producing 6.8% annual return. (not the 20/80 allocations we have been discussing).
As far as what is held within the bond holdings of the 80% (or 50%)...... references are made to Fidelity Asset Manager series and RPSIX for comparisons but as you said we do not know what TRP used in the study.
Interesting subject matter.
References are also made to M* Conservative Retirement Saver Portfolio using the Lifetime Allocation Indexes. Christine Benz wrote an article providing suggested funds with allocation %'s which I plan to analyze for metrics.

I think you meant: Your job, should you decide to accept it ... This portfolio will self destruct in five years :-)
While active management (I'm a big fan of Wellington) can add some value its impact is marginal compared with the effect of allocation decisions. I'd focus on that, and then just pick the fund or funds that best match the chosen allocation.
For example, Life Strategy Conservative Growth (VSCGX) and Wellesley (VWIAX) are both 40/60 funds. VWIAX has done better over the past 1 and 10 years, while VSCGX has done better over the past 5. Over the past 3 years the difference was minuscule (0.04%).
With respect to the allocation of foreign securities, the portfolio is underweighted. I might try to increase that. (OTOH, given the long term underperformance of foreign holdings, this suggestion might be analogized to eating one's vegetables.)
Vanguard's neutral foreign allocation is 40%. (I'll dig up a source for that if needed.) VSCGX seems to target that, with 40% of its equity holdings being foreign. It also has a healthy slug of foreign bonds. So that's one way to boost foreign exposure. VGSTX (30% of equity is foreign) is another.
The point is not to pick funds at the start, but to identify a target allocation (stock/bond, domestic/foreign) and then pick the funds that most simply come close to that target.
FWIW, if the cash really is not needed over the next decade, and the target time frame is 5-10 years, a traditional 60/40 allocation would be reasonable. If the cash might be used in under five years, I'd think in terms of bond funds. Since the friend wants allocation funds, one could use a 20/80 fund (VASIX) and overweight it. Or even push it to a 30/70 fund (VTINX).

Is the object is to get the maximum return for the minimum volatility (which IMHO is not the same as risk, but a subject for another day) with a traditional fixed allocation? That seems to be what's implied by the observation that a 20/80 allocation has the potential for 60% of the returns with 25% of the volatility.
Again using Portfolio Visualizer, one can see that the optimal allocation (using 20/20 hindsight) varies depending on the calendar years used. "Optimal" here meaning highest reward/"risk", i.e. highest Sharpe ratio. Using VTSMX and VBMFX as proxies for the US stock and bond markets, the optimal allocations (per PV) are:
Jan 2019 - Dec 2021 (3 years): 20.4/79.6, Sharpe ratio 1.64 (same as 20/80)
Jan 2017 - Dec 2021 (5 years): 21.8/78.2, Sharpe ratio 1.28 (vs. 1.27 for 20/80)
Jan 2012 - Dec 2021 (10 years): 26.5/73.5, Sharpe ratio 1.35 (vs. 1.33 for 20/80)
Jan 2007 - Dec 2021 (15 years): 13/87, Sharpe ratio 1.15 (vs. 1.11 for 20/80)
Even though the optimal allocation varies widely (from 13% stocks to 26% stocks) depending on years and time frame, a fixed 20/80 allocation appears to come very close to optimal in all periods. So it's likely not productive to try to vary one's allocation based on future predictions.
The Sharpe ratios (per PV) over 3/5/10/15 year periods for VASIX, FASIX, and BACPX are lower than the fixed 20/80 Sharpe ratios above:

Period	VASIX	FASIX	BACPX
3 years	 1.43	1.28	1.46
5 years	 1.15	1.01	1.10
10 years 1.22	1.10	1.27
15 years 0.86	0.76	0.66

https://www.portfoliovisualizer.com/backtest-portfolio
If one periodically rebalances one's portfolio, then there's no additional work in buying two index funds and maintaining a 20/80 mix. But if one wants a set-and-forget portfolio, then a single fixed allocation fund (or a target date fund if one wants the mix to gradually change) or a cheap robo advisor that uses basic broad market index funds could be the best and simplest choices.

VG Star VGSTX is an underrated VG moderate-allocation fund. It is a passive fund of several VG active funds. It won't be at the top or bottom of moderate-allocation funds and risk of manager changes is small (unlikely that all funds will change managers at the same time). Unfortunately, there is only Investor class with low ER of 0.31% (no top-level fee; ER is from underlying funds) but underlying funds are Investor classes.
https://investor.vanguard.com/mutual-funds/profile/portfolio/vgstx

Premise:
You are gratuitously managing the portfolio of a 70-year old dear friend in great health with NO income or cash needs.
Friend has been sitting on about 20% cash for the past several years and has decided she now wants to invest some/all of it.
Friend particulars:
Total Return investor seeking maximum TR over the next 5-??? years
Tax-deferred account
Volatility is NOT an issue
Diversification is NOT an issue
Already owns sizeable chunks of VWENX, VBIAX, VWIAX and VGWAX and does NOT want to add to those positions
ONLY wants to own VG Asset Allocation funds
No heirs, entire estate is being willed to charities
Friend has never and you trust will never hold you accountable for anything related to her portfolio performance
Your job:
You are trying to compile a suggestion list of at least 2-3 funds but know there are not many more VG AA funds available.
Given this premise and these particulars, what VG Asset Allocation fund(s) would you suggest?
EDIT: I have compiled my suggestion list but don't want to present it here yet and possibly affect other suggestions.
Given the limited number of other VG AA funds available, would you attempt to suggest
(1) any non-VG AA funds and if so, what would they be
(2) simply adding to existing holdings?

FASIX 1/3/5/10/15y = 3.76 7.66 5.53 4.78 4.46
VASIX 1/3/5/10/15y = 1.56 7.49 5.61 4.92 4.60
(if I am reading the M* data right)
so for me no

Bill Nygren of Oakmark funds have done well in 2021 relative to their benchmark. He is a good value manager and he owed up to his mistakes (i.e. Washington Mutual back in 2008) while improved their risk management process to avoid the classic “value traps”. Their annual reports are worthwhile to read as well.

+1

I believe the unnamed article referenced is one from Prof. Snowball:
Investing in 2022: The Indolent Portfolio (Jan 2022), citing
The case for a stock-light portfolio, version 4.0 (April 2021), or
Mutual Fund Commentary Nov 1, 2014
They all reference the same T. Rowe Price analysis of data from 1949 to 2013. For more current data and something a bit more interactive, Portfolio Visualizer has an efficient frontier tool.
https://www.portfoliovisualizer.com/efficient-frontier
Worth noting is that the TRP analysis probably uses either Treasuries or total US (IG) bond market for the fixed income portion. Those have virtually zero correlation with the US stock market.
This matters because as one uses "junkier" bonds (moving from IG funds to core-plus funds, multi-sector, and ultimately to HY funds) the correlation with stocks increases substantially. This in turn reduces the diversification effect of the bonds and thus does less to temper the equity volatility. Interestingly, according to PV, using HY rather than IG bonds results in a lower return efficient frontier. That is, for a given target volatility, HY + equities returns less than IG + equities.
This PV output shows the efficient frontiers and optimal allocations (i.e. highest Sharpe ratios) using data from 1987 through 2021.
The higher efficient frontier (EF) curve, i.e. the one with the higher return for a given level of volatility, is the IG + equity portfolio. Mixing HY and equity doesn't do as well. An 80/20 IG/equity mix, according to the curve, has a standard deviation of around 4.4%, or around 30% of the 15.3% volatility of a pure equity portfolio. It also has an average return of 7%, which is about 60% of the 12.3% return from the equity portfolio. Figures that are consistent with the TRP results.
You can play around with this, e.g. using a portfolio of HY, Intermediate Treasuries, and equities. The result of that experiment suggests that once one goes above 40% in equities, one is better off leaving out the junk bonds.

Interesting interview from Nov. https://www.morningstar.com/articles/1063412/these-renowned-stock-pickers-are-taking-change-in-stride
One gets a clear sense of the differences between these two fund managers but some similarities too… and even with dare I say Cathie Wood?
Favorite quotes:
TESLA
“Lynch: I think it’s a tough business. Selling cars that are expensive for the average customer, that require financing, is a little different than selling Internet ads. We did own Tesla for about three years. It was a small, more of a speculative-size position back when the first consumer reports came out around the product, and the company was starting to have a real revenue stream in front of it. But the constant need for capital from the capital markets does put you in a position, potentially, during times of uncertainty of relying on the kindness of strangers to continue the business model. Cathie Wood would say it’s not just about selling cars. There might be more to it than that—energy storage, energy services, and things of that nature. Still, ultimately, it’s a car company, and there are a lot of other big car companies that scale. They do a lot of things differently that are interesting, but ultimately the capital intensity and the constant need for external financing for us became problematic.”
ZOOM
“ Nygren: When we weren’t able to be in the office, we were using Zoom as much as anybody else was, and as a consumer, I loved the product. The concern that we had was that Zoom was being priced as if it were going to be the dominant market leader for a long time. But one conference call would be on Zoom, and then the next one on Google Meet, and then Microsoft (MSFT) Teams and BlueJeans, and they all look just about alike as a user.” <— He’s absolutely right on this point.
BUBBLE? Stocks vs Bonds
Nygren: “ I’m not going to sit here and argue that it’s a generational opportunity to buy equities or anything like that. But given where interest rates are, owning an equity like the S&P that pays almost a 2% dividend yield and has earnings that are growing at 6% or 7% a year, compared to a long-term bond, is an easy choice to make.
Lynch: “ But all things equal, I would rather own smaller companies with smaller market caps that we think could be much bigger over time than some of the larger companies that exist today.”
BITCOIN
Lynch: “ We talked about persistence earlier. Bitcoin’s kind of like Kenny from South Park. It dies every episode, and then it’s back again. As for adoption, it’s almost like bitcoin’s a virus and we’re all a little bit infected. Some people fully have gone there, and some people haven’t, but we all know about it. That’s interesting to me from a viral mechanism.”
BANKING
“Reichart: Bill, you own a lot of financials. How worried are you about disruption in the financial sector?
Nygren: Most of the financial names we own are selling relatively close to stated book value. In a world where they get disrupted and their business goes down every year, they could liquidate for relatively close to the current stock. Brian Moynihan [CEO of Bank of America BAC ] said that the pandemic has pulled forward mobile banking by a decade. If you go into a bank to a teller, it costs them $4 to process your check. If you do it at an ATM, it’s 40 cents. And if you do it on your phone, it’s 4 cents. The big banks are a disruptor there because they are so far ahead in mobilization for their clients. I don’t see a big downside for most of the companies that we own.”

They've had at least 3 different equity exposure rules since I've owned the fund. I hold it in all 3 of my Fidelity accounts since it seems like a prudent alternative to earning 1 basis point in a MMA.

@lynnbolin2021 Thank you for sharing the contents of the “aggressive” Roth and for providing such a detailed analysis of the model portfolios and why you chose the port and Fido option you did. As with all of your posts, there’s tons of info there and learnings. A small point but I appreciated you including FBALX as a benchmark too. Will continue to follow your posts on SA and hope you are a regular contributor here.
https://www.mutualfundobserver.com/2022/01/building-a-multi-strategy-portfolio-managed-fidelity-roth-ira/

I was reading the thread on Thermostat, which prompted me to peer at its risk-adjusted returns. Interesting. Of all funds and ETFs - equity, allocation and income together - only CTFAX makes it as a top 10 fund for the past three, five and 10-year periods. I was a bit skeptical because the discipline was revised three years ago to allow greater latitude in equity exposure. Nonetheless it remains locked-in to a top 10 Sharpe ratio. 8.7% raw returns over the decade, 16.9% over the past three years.
If Morningstar's to be trusted, the fund has hit its minimum permissible equity exposure (10%).
Fascinating and just enough to give one slight pause.
Cheers!
David