{"id":115470,"date":"2025-02-28T15:36:34","date_gmt":"2025-02-28T15:36:34","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/ishares-core-allocation-etfs-vs-vanguards-lifestrategy-funds-oblivious-investor\/"},"modified":"2025-02-28T15:36:34","modified_gmt":"2025-02-28T15:36:34","slug":"ishares-core-allocation-etfs-vs-vanguards-lifestrategy-funds-oblivious-investor","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=115470","title":{"rendered":"iShares Core Allocation ETFs vs. Vanguard\u2019s LifeStrategy Funds \u2014 Oblivious Investor"},"content":{"rendered":"


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A reader writes in, asking:<\/p>\n

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\u201cI recently learned about the \u2018core allocation\u2019 ETFs from iShares. I haven\u2019t seen these discussed before on Bogleheads or elsewhere, but upon researching they seem like a good option to recommend to anybody who isn\u2019t interested in really managing a portfolio on their own. Any thoughts on the core allocation ishares ETFs?\u201d<\/p>\n<\/blockquote>\n

The short answer is that I think they\u2019re excellent.<\/p>\n

For anybody who hasn\u2019t encountered the iShares Core Allocation ETFs before, they\u2019re funds that (like the LifeStrategy funds from Vanguard) offer a static, diversified allocation. In other words, they seek to offer a diversified portfolio in a single fund.<\/p>\n

As far as differences, first and most obviously, they\u2019re ETFs rather than traditional mutual funds. That means you can get commission-free access to the iShares Core Allocation funds at most brokerage firms, whereas generally you must have an account with Vanguard in order to buy the LifeStrategy funds without paying a commission.<\/p>\n

In addition, when held in a taxable account, the iShares Core Allocation ETFs are somewhat more tax-efficient than the Vanguard LifeStrategy funds, due to being ETFs<\/a>. For instance, if you look at the historical distributions of the iShares Core Allocation ETFs, you\u2019ll see no capital gain distributions other than a single one in January 2018 or December 2017 depending on the fund, whereas the LifeStrategy funds make capital gain distributions every year.<\/p>\n

As far as costs, the iShares Core Allocation ETFs have expense ratios of 0.15%. That\u2019s ever so slightly<\/em> higher than the 0.11-0.14% expense ratios for Vanguard\u2019s LifeStrategy funds. In either case, you\u2019re paying somewhat more than what you\u2019d pay with a DIY portfolio of individual ETFs or index funds. But I would not hesitate to describe both the LifeStrategy funds and iShares Core Allocation ETFs as \u201clow-cost funds.\u201d And for anybody who doesn\u2019t want to bother with rebalancing a portfolio, the cost is likely to be worth it.<\/p>\n

As far as asset allocation, the overall stocks\/bond allocations are as follows:<\/p>\n

If you\u2019re familiar with the LifeStrategy allocations, you\u2019ll notice that this is very similar, with the one difference being that the iShares Core Allocation ETFs only go as low as 30% stocks, whereas the LifeStrategy Income Fund has a 20% stock allocation.<\/p>\n

With regard to the actual underlying holdings, it\u2019s pretty run-of-the-mill stuff. Nothing esoteric in any way. (That\u2019s a good thing!) For instance, here\u2019s the underlying allocation of the iShares Core Aggressive Allocation ETF (AOA), according to Morningstar<\/a> as of 2\/21\/2025:<\/p>\n