Hi
@sma3
My sister who knows nothing about investing wants a conservative asset allocation fund in early retirement for an inheritance she doesn't need to live on.
I'll presume from your statement that: your sister is already in retirement and that her inheritance will be invested in a taxable account.
I noted the following a few days ago regarding a 529 account that was started in 2006 but could be applied to a taxable account, too:
>>>We set our own allocation, being 50/50 with VITPX and VBMPX. The expense ratio for the funds are .02 and .03%. VITPX holds 3,400 equities and VBMPX holds 18,000 bonds. YOW !!!
The 50/50 ratio is required to auto balance once per year. So, the ratio has never traveled to far outside of 50/50.
The 10 year total return for this blend of 2 funds is 8.705%.
I've used FBALX as a benchmark for our own investments to discover how much of a smart arse or dumb arse we may be at any given time. FBALX is high on the list of balanced funds in it's category.
FBALX has a 10 year annualized return of 10.83%. <<<
An equivalent to the above could be a simple 50/50 of SPY and AGG (or BAGIX, a plain vanilla active managed AA bond fund); OR whatever percentage mix an individual wants to choose for these two. The rough math indicates a 50/50 mix of the above to provide about a +8.45% blended total return for the past 10 years and +6.95% over the past 15 years.
My personal choice using AGG or BAGIX examples for bonds, would be the equity side into FSPHX or
FSMEX for the 50/50 mix.
We individual investors find ourselves at an unfamiliar place recently, relative to the AAA bond sector. Although we have BAGIX as part of our portfolio, I/we don't know how much support/ballast will arrive during a greater than -20% equity dive, although I still feel central banks and large investment organizations would still run to AAA bonds during an equity melt.
NOTE: 50/50 of SPY (or an index) and AGG = -.4% YTD, VWINX = -.25% YTD and FBALX = +2.3% YTD.
I think your sister could have a decent risk and reward blend of no more than 3 holdings among bonds and equity to satisfy a meaningful performance portfolio.
Lastly, retirement finds too many variables for individuals/couples. If monetary needs are satisfied for the normal expenses, one's investments should still include equities, IMHO. Forty years of favorable bond returns are at a new place right now; and I surely don't know the forward road in this sector for a fully buy and hold portfolio.
Take care,
Catch