VOO Vs. VGIT: Why We Don't Do 40-60

(11min)

Summary

  • The traditional 40-60 allocation model does not factor in ongoing macroeconomic variables such as tariff disputes and the odds of a potential stagflation.
  • VOO's valuation risks are unusually high, judging by its yield spread relative to VGIT or the S&P 500’s excess CAPE yield.
  • The above macroscopic uncertainties further compound the valuation risks.
  • Thus, more passive investors could consider diluting VOO by other assets and more active investors could consider a dynamic allocation model.
  • This idea was discussed in more depth with members of my private investing community, Envision Early Retirement. Learn More »
Asset Allocation

DNY59

VGIT and VOO ETF: Previous Thesis and New Developments

I last analyzed the Vanguard S&P 500 ETF (NYSEARCA:VOO) back in mid-March 2025. That article was titled “VOO Vs. SPY: Hold VOO For The Long Term” and focused on the specifics of VOO

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This article was written by

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Sensor Unlimited is an economist by training with a PhD, with a focus on financial economics. She is a quantitative modeler and for the past decade she has been covering the mortgage market, commercial market, and the banking industry. She writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets.

Sensor Unlimited contributes to the investing group Envision Early Retirement which is led by Sensor Unlimited. They offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request. Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ALL TICKERS IN TEH MODEL PORTFOLIO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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