Vanguard ETF strategic model portfolios
Vanguard ETF? strategic model portfolios
September 30, 2014
For financial advisors AND INSTITUTIONs only. Not for public distribution.
Broadly diversified portfolios with your choice of respected benchmarks
Regardless of your clients' allocation needs or your benchmark preference, Vanguard offers a suitable market-weighted model portfolio.
With Vanguard ETF strategic model portfolios, you and your clients also have the advantages of our remarkably low costs, deep indexing experience, and trusted name.
Vanguard models are a good fit for your client portfolios
Take advantage of the experience of a proven leader
Vanguard ETF strategic model portfolios are created and maintained by our Investment Strategy Group, whose responsibility it is to develop and maintain Vanguard's investment methodology, including portfolio construction and asset allocation modeling.
The group draws from Vanguard's 40 years of indexing experience to ensure that our model portfolios reflect our belief that investment success hinges on asset allocation, broad diversification, and low cost.
A firm belief in a top-down approach
Asset allocation
Mutual fund (active)
Sub-asset allocation
Investment selection
ETF (passive)
Vanguard ETF models
Strategic
Tactical
?Ideal core portfolio strategy ?E xcellent tactical strategy complement
Features ?Broad-market exposure ?L ower return variability ?G reater potential level of tax efficiency ?M ultiple options that span the risk-reward spectrum
Our approach starts with broad asset class exposure to U.S. and international equities, and global investmentgrade bonds in a strategic, index-centric framework.
Portfolio construction reflects a market-cap-weighted approach, with exposure to size and style determined by the benchmark.
Our ETF portfolios pursue no tactical overlays or factor bets within their asset classes. Our portfolio sub-asset allocations also employ a fixed 70%/30% ratio of U.S. and international stocks, as well as an 80%/20% ratio of U.S. and international bonds, which reflects a deliberate "home bias" relative to global market-cap-weighted benchmarks.
Core series
Our most straightforward portfolios include broadly diversified domestic and international equity and bond Vanguard ETFs?. In addition, each portfolio features remarkably low costs and the potential for fewer capital gains.
Choose from six allocation models that span the risk/reward spectrum.
Asset allocation (% equity/fixed income)1
Vanguard ETF/ticker
Expense ratio2 0/100 20/80 40/60 60/40 80/20 100/0
Domestic equity
Total Stock Market VTI
0.05% 0.0% 13.7% 27.4% 41.2% 54.9% 68.6%
International equity
Total International Stock VXUS
0.14% 0.0% 5.9% 11.8% 17.6% 23.5% 29.4%
Domestic fixed income
Total Bond Market BND
0.08% 78.4% 62.7% 47.0% 31.4% 15.7% 0.0%
International fixed income
Total International Bond BNDX
0.20% 19.6% 15.7% 11.8% 7.8% 3.9% 0.0%
Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Weighted expense ratio
0.10% 0.10% 0.09% 0.09% 0.08% 0.08%
1 T he weights were determined based on market characteristics, Vanguard philosophy, and the availability of the ETFs in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%.
2 As reported in each ETF's most recent prospectus as of September 30, 2014. The current expense ratio may be higher or lower than the figure shown.
Source: Vanguard calculations using data from FactSet.
CRSP series
Center for Research in Security Prices (CRSP) indexes offer domestic equity and balanced options for the flexibility you need to construct and maintain highly diversified portfolios for your clients.
Choose from six allocation models that span the risk/reward spectrum.
Asset allocation (% equity/fixed income)1
Vanguard ETF/ticker
Expense ratio2 0/100 20/80 40/60 60/40 80/20 100/0
Domestic equity
Growth VUG
0.09% 0.0% 5.5% 10.9% 16.4% 21.9% 27.3%
Value VTV
0.09
0.0
6.5 13.1
19.6 26.1
32.7
Small-Cap VB
0.09
0.0
1.7
3.4
5.2
6.9
8.6
International equity
FTSE Developed Markets VEA
0.09% 0.0% 4.2% 8.4% 12.7% 16.9% 21.1%
FTSE Emerging Markets VWO
0.15
0.0
1.0
2.1
3.1
4.1
5.2
FTSE AW ex-US Sm-Cap VSS
0.20
0.0
0.7
1.3
1.8
2.5
3.1
Domestic fixed income
Short-Term Bond BSV
0.10% 33.6% 26.9% 20.2% 13.4% 6.7% 0.0%
Inter-Term Bond BIV
0.10 15.8 12.7
9.5
6.3
3.2
0.0
Long-Term Bond BLV
0.10
12.0
9.5
7.1
4.9
2.4
0.0
Mortgage-Backed Sec VMBS
0.12
17.0
13.6 10.2
6.8
3.4
0.0
International fixed income
Total International Bond BNDX
0.20% 19.6% 15.7% 11.8% 7.8% 3.9% 0.0%
Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Weighted expense ratio 0.12% 0.12% 0.11% 0.11% 0.10% 0.09%
1 T he weights were determined based on market characteristics, Vanguard philosophy, and the availability of the ETFs in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%.
2 As reported in each ETF's most recent prospectus as of September 30, 2014. The current expense ratio may be higher or lower than the figure shown.
Source: Vanguard calculations using data from FactSet.
S&P series
S&P indexes give you access to your provider of choice with Vanguard ETFs. You can construct and maintain highly diversified portfolios that seek to track respected S&P benchmarks for the domestic allocation of your clients' portfolios.
Choose from six allocation models that span the risk/reward spectrum.
Asset allocation (% equity/fixed income)1
Vanguard ETF/ticker
Expense ratio2 0/100 20/80 40/60 60/40 80/20 100/0
Domestic equity
S&P 500 VOO
0.05% 0.0% 11.1% 22.1% 33.2% 44.3% 55.3%
Extended Market VXF
0.10
0.0
2.6
5.3
8.0 10.6 13.3
International equity
FTSE Developed Markets VEA
0.09% 0.0% 4.2% 8.4% 12.7% 16.9% 21.1%
FTSE Emerging Markets VWO
0.15
0.0
1.0
2.1
3.1
4.1
5.2
FTSE AW ex-US Sm-Cap VSS
0.20
0.0
0.7
1.3
1.8
2.5
3.1
Domestic fixed income
Short-Term Bond BSV
0.10% 33.6% 26.9% 20.2% 13.4% 6.7% 0.0%
Inter-Term Bond BIV
0.10 15.8 12.7
9.5
6.3
3.2
0.0
Long-Term Bond BLV
0.10 12.0
9.5
7.1
4.9
2.4
0.0
Mortgage-Backed Sec VMBS
0.12
17.0
13.6 10.2
6.8
3.4
0.0
International fixed income
Total International Bond BNDX
0.20% 19.6% 15.7% 11.8% 7.8% 3.9% 0.0%
Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Weighted expense ratio 0.12% 0.11% 0.10% 0.09% 0.08% 0.07%
1 T he weights were determined based on market characteristics, Vanguard philosophy, and the availability of the ETFs in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%.
2 As reported in each ETF's most recent prospectus as of September 30, 2014. The current expense ratio may be higher or lower than the figure shown.
Source: Vanguard calculations using data from FactSet.
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