Vanguard portfolio allocation models

Vanguard portfolio allocation models

Vanguard portfolio allocation models

portfolio allocations - Income

An income-oriented investor seeks current income with minimal risk to principal, is comfortable with only modest long-term growth of principal, and has a short- to mid-range investment time horizon.

100% bonds
100% bonds
Historical Risk/Return (1926–2015)
Average annual return     5.4%
Best year (1982)     32.6%
Worst year (1969)     –8.1%
Years with a loss    

14 of 90

20% stocks/ 80% bonds
20% stocks/ 80% bonds
Historical Risk/Return (1926–2015)
Average annual return     6.7%
Best year (1982)     29.8%
Worst year (1931)     –10.1%
Years with a loss     12 of 90

30% stocks/ 70% bonds
30% stocks/ 70% bonds
Historical Risk/Return (1926–2015)
Average annual return     7.2%
Best year (1982)     28.4%
Worst year (1931)     –14.2%
Years with a loss     14 of 90
Balanced

A balanced-oriented investor seeks to reduce potential volatility by including income-generating investments in his or her portfolio and accepting moderate growth of principal, is willing to tolerate short-term price fluctuations, and has a mid- to long-range investment time horizon.

40% stocks / 60% bonds
40% stocks / 60% bonds
Historical Risk/Return (1926–2015)
Average annual return     7.8%
Best year (1933)     27.9%
Worst year (1931)     –18.4%
Years with a loss     16 of 90

50% stocks / 50% bonds
50% stocks / 50% bonds
Historical Risk/Return (1926–2015)
Average annual return     8.3%
Best year (1933)     32.3%
Worst year (1931)     –22.5%
Years with a loss     17 of 90

60% stocks / 40% bonds
60% stocks / 40% bonds
Historical Risk/Return (1926–2015)
Average annual return     8.7%
Best year (1933)     36.7%
Worst year (1931)     –26.6%
Years with a loss     21 of 90
Growth

A growth-oriented investor seeks to maximize the long-term potential for growth of principal, is willing to tolerate potentially large short-term price fluctuations, and has a long-term investment time horizon. Generating current income is not a primary goal.

70% stocks / 30% bonds
70% stocks / 30% bonds
Historical Risk/Return (1926–2015)
Average annual return     9.1%
Best year (1933)     41.1%
Worst year (1931)     –30.7%
Years with a loss     22 of 90

80% stocks / 20% bonds
80% stocks / 20% bonds
Historical Risk/Return (1926–2015)
Average annual return     9.5%
Best year (1933)     45.4%
Worst year (1931)     –34.9%
Years with a loss     23 of 90

100% stocks
100% stocks
Historical Risk/Return (1926–2015)
Average annual return     10.1%
Best year (1933)     54.2%
Worst year (1931)     –43.1%
Years with a loss     25 of 90

When determining which index to use and for what period, we selected the index that we deemed to be a fair representation of the characteristics of the referenced market, given the information currently available. For U.S. stock market returns, we use the Standard & Poor's 90 from 1926 through March 3, 1957, the Standard & Poor's 500 Index from March 4, 1957 through 1974, the Wilshire 5000 Index from 1975 through April 22, 2005, the MSCI US Broad Market Index from April 23, 2005 through June 2, 2013, and the CRSP US Total Market Index thereafter.

For U.S. bond market returns, we use the Standard & Poor's High Grade Corporate Index from 1926 through 1968, the Citigroup High Grade Index from 1969 through 1972, the Lehman Brothers U.S. Long Credit AA Index from 1973 through 1975, the Barclays U.S. Aggregate Bond Index from 1976 through 2009, and the Spliced Barclays U.S. Aggregate Float Adjusted Bond Index thereafter.

For U.S. short-term reserve returns, we used the Ibbotson 1-Month Treasury Bill Index from 1926 through 1977 and the Citigroup 3-Month Treasury Bill Index thereafter.


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