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Should You Let Vanguard Handle Your Income Needs?

Vanguard's managed payout funds are useful, but they do have limitations.

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Vanguard's Managed Payout Funds may not be perfect income-producing solutions, but they can be good ones.

The three funds-- Vanguard Managed Payout Growth Focus(VPGFX),  Growth & Distribution Focus( VPGDX), and  Distribution Focus(VPDFX)--launched into the maw of 2008's vicious bear market. Losses quickly forced them to reduce their monthly payments and tap shareholders' principal to fund payouts. That unpleasant debut kept investors away. Since then, however, the funds' results and payouts have recovered, lending credence to Vanguard's claim that the endowmentlike offerings and their distribution methods were built to last.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.