PDF Vanguardfi Balanced Index Fund
Vanguard?
Vanguard? Balanced Index Fund
Investment Approach Balanced allocation: 60% stocks, 40% bonds. Seeks capital appreciation, current income, and long-term growth of income. Equity portfolio seeks to track the CRSP US Total Market Index; fixed income portfolio seeks to track the Bloomberg U.S. Aggregate Float Adjusted Index. Passively managed approach, using index sampling. Low expenses minimize net tracking error.
Note: The Investor Shares are closed to new investors.
Quality
Market capitalization
Vanguard Style View: Moderate Allocation
Index portfolio of large-, mid-, and small-capitalization stocks diversified across investment styles.
Investment style Value Blend Growth
Large
Mid
Small
Portfolio of U.S. Treasury, investment-grade corporate, and asset-backed securities.
Duration Short Medium Long Trsy/ Agcy Inv Grd Corp Below Inv Grd
Central tendency Expected range of fund holdings
Quarterly Commentary
Early in the third quarter of 2023, market sentiment was buoyant. Inflation was trending lower, suggesting that the Federal Reserve and other major central banks might not need to raise interest rates much higher. Resilience in the labor market and consumer spending helped dial back expectations of a recession in the near term. The mood soured as the quarter progressed, however, amid rising energy prices and the prospect of interest rates remaining higher for longer.
Stocks finished the period lower, with equities in Europe and the United States weakening more than those in Asia and emerging markets.
Overall, yields of U.S. bonds finished higher and their prices lower. The yield for the bellwether 10-year U.S. Treasury, for example, climbed from 3.83% to 4.57%. The broad U.S. investment-grade bond market returned ?3.11% (as measured by the Bloomberg U.S. Aggregate Float Adjusted Index).
The Balanced Composite Index, which is weighted 60% U.S. stocks and 40% U.S. bonds and is the benchmark for Vanguard Balanced Index Fund, returned ?3.24% for the quarter.
The benchmark's equity component, the CRSP US Total Market Index, returned ?3.30%. The technology, consumer discretionary, and industrial sectors contributed the most toward negative performance.
The result for the benchmark's fixed income component, the Bloomberg U.S. Aggregate Float Adjusted Index, was driven largely by the performance of longer-dated and higher-rated bonds.
For the 12 months ended September 30, 2023, the Balanced Composite Index returned 12.52%; its equity component returned 20.37% and its bond component 0.78%.
Small deviations in the fund's performance versus that of its benchmark index may occur because of the fund's approach to approximating the index and temporary pricing differences between the fund and the index.
People and Process
Vanguard Balanced Index Fund seeks capital appreciation, current income, and long-term growth of income by tracking the investment performance of a balanced benchmark, with 60% of assets invested in the broad U.S. stock market and 40% of assets held in the investment-grade U.S. bond market.
As of September 30, 2023
Vanguard Balanced Index Fund
Equity Component: The fund's stock portfolio seeks to track the investment performance of the CRSP US Total Market Index, an unmanaged benchmark representing the overall U.S. equity market. The portfolio replicates approximately 90% of the market capitalization of the CRSP US Total Market Index and invests in a representative sample of the balance using a portfolio optimization technique to avoid the expense and impracticality of full replication. The experience and stability of Vanguard's Equity Index Group have permitted continuous refinement of techniques for reducing tracking error. The group uses proprietary software to implement trading decisions that accommodate cash flow and maintain close correlation with index characteristics. Vanguard's refined indexing process, combined with low management fees and efficient trading, has provided tight tracking net of expenses.
Fixed Income Component: The fund's bond portfolio seeks to track the investment performance of the Bloomberg U.S. Aggregate Float Adjusted Index, an unmanaged benchmark representing the broad, investment-grade, taxable U.S. bond market. The portfolio's passive investment style uses a sampling technique to closely match key benchmark characteristics: sector weight, coupon, maturity, effective duration, convexity, and credit quality. The optimized sampling technique is designed to avoid the expense and impracticality of fully replicating the index.
The Vanguard Group
Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is among the world's largest equity and fixed income managers. As chief investment officer, Gregory Davis, CFA, oversees Vanguard's Equity Index, Investment Strategy, Quantitative Equity, and Fixed Income Groups. The group has advised Vanguard Balanced Index Fund since 1992.
Vanguard Equity Index Group
Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is among the world's largest equity and fixed income managers. As chief investment officer, Gregory Davis, CFA, oversees Vanguard's Equity Index, Investment Strategy, Quantitative Equity, and Fixed Income Groups. Rodney Comegys, Principal and global head of Vanguard's Equity Index Group, is responsible for all equity index funds. The Equity Index Group manages indexed equity portfolios covering U.S. and international markets. It has developed sophisticated portfolio construction methodologies and efficient trading strategies that seek to deliver returns that are highly correlated with target portfolio benchmarks. The group has advised Vanguard Balanced Index Fund since 1992.
Investment Manager Biographies
Gerard C. O'Reilly, Principal. Portfolio manager. Advised the fund since 2016. Worked in investment management since 1992. B.S., Villanova University.
Michael R. Roach, CFA. Portfolio manager. Advised the fund since 2023. Worked in investment management since 2000. B.S., Bloomsburg University of Pennsylvania. M.S., Drexel University.
Aurelie Denis, CFA. Portfolio manager. Advised the fund since 2023. Worked in investment management since 2017. B.S., Pennsylvania State University.
Vanguard Fixed Income Group
Sara Devereux, principal and global head of Fixed Income Group, has direct oversight responsibility for all money market, bond, and stable value portfolios managed by the Fixed Income Group. The Fixed Income Group offers actively managed investments in U.S. Treasury, corporate, and tax-exempt securities, as well as passively managed index portfolios. Since 1981, it has refined techniques in total-return management, credit research, and index sampling to seek to deliver consistent performance with transparency and risk control.
Investment Manager Biographies
Joshua C. Barrickman, CFA, Principal, Co-Head of Fixed Income Indexing Americas. Portfolio manager. Advised the fund since 2013. Worked in investment management since 1999. B.S., Ohio Northern University. M.B.A., Lehigh University.
Tara Talone, CFA. Portfolio manager. Advised the fund since 2022. Worked in investment management since 2008. B.S., Saint Joseph's University. M.B.A., The Wharton School of the University of Pennsylvania.
As of September 30, 2023
Vanguard Balanced Index Fund
Investment Advisors
Vanguard Equity Index Group Vanguard Fixed Income Group Cash investments Total
Fund Assets Managed
%
$ Million
60
29,021
38
18,421
1
635
100
48,077
Total Returns
Balanced Index Fund Investor Shares (11/9/1992) Admiral Shares (11/13/2000) Institutional Shares (12/1/2000)
Balanced Composite Index
Expense Ratio
0.18% 0.07 0.06
--
Quarter
-3.24% -3.21 -3.21 -3.20
Year to Date
6.81% 6.93 6.91 7.00
1 Year
12.04% 12.17 12.15 12.52
3 Years
3.30% 3.41 3.42 3.66
5 Years
5.63% 5.75 5.76 6.09
10 Years
7.19% 7.32 7.33 7.55
The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors' shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Figures for periods of less than one year are cumulative returns. All other figures represent average annual returns. Performance figures include the reinvestment of all dividends and any capital gains distributions. All returns are net of expenses.
Note: Balanced Composite Index: Weighted 60% Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) and 40% Lehman Brothers U.S. Aggregate Bond Index through May 31, 2005; 60% MSCI US Broad Market Index and 40% Bloomberg U.S. Aggregate Bond Index through December 31, 2009; 60% MSCI US Broad Market Index and 40% Bloomberg U.S. Aggregate Float Adjusted Index through January 14, 2013; and 60% CRSP US Total Market Index and 40% Bloomberg U.S. Aggregate Float Adjusted Index thereafter. Admiral class shareholders are required to maintain specific minimum balances and meet other special criteria. Institutional class shareholders are required to maintain a minimum balance of $5 million.
As of September 30, 2023
Vanguard Balanced Index Fund
Quarterly Returns: Investor Shares
Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
1st Quarter 5.53% -5.62 2.34
-11.63 9.54 -0.91 3.78 1.94 1.71 1.96 6.50
2nd Quarter 4.60% -12.16 5.76 14.24 3.73 2.25 2.40 2.53 -0.70 3.68 0.70
3rd Quarter -3.24% -4.52 -0.06 5.71 1.64 4.23 2.99 2.79 -3.87 0.03 3.90
4th Quarter --
4.89% 5.47 8.94 5.36 -8.11 3.93 1.12 3.38 3.88 5.82
Balanced Index Fund
-- -16.97% 14.09 16.26 21.67 -2.97 13.75
8.63 0.37 9.84 17.91
Balanced Composite
Index --
-16.41% 14.28 17.34 21.87 -2.80 13.93 8.89 0.76 10.06 18.25
Year-End
Assets (Millions)
$186 199 317 334 396
3,014 3,474 3,343 3,090 3,174 2,974
Quarterly Returns: Admiral Shares
Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
1st Quarter 5.59% -5.60 2.37
-11.60 9.57
-0.88 3.82 1.98 1.74 1.99 6.53
2nd Quarter 4.63%
-12.14 5.79 14.27 3.73 2.28 2.43 2.56 -0.66 3.71 0.74
3rd Quarter -3.21% -4.49 -0.03 5.74 1.70 4.25 3.02 2.82 -3.83 0.07 3.94
4th Quarter --
4.90% 5.50 8.97 5.36 -8.09 3.96 1.14 3.41 3.92 5.87
Balanced Index Fund
-- -16.90%
14.22 16.40 21.79 -2.86 13.89
8.77 0.51 9.99 18.10
Balanced Composite
Index --
-16.41% 14.28 17.34 21.87 -2.80 13.93 8.89 0.76 10.06 18.25
Year-End
Assets (Millions) $38,793
37,437 47,564 39,901 33,585 23,913 23,556 18,695 15,726 14,112 9,688
As of September 30, 2023
Vanguard Balanced Index Fund
Quarterly Returns: Institutional Shares
Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
1st Quarter 5.57% -5.59 2.35
-11.59 9.57 -0.87 3.78 1.98 1.78 1.99 6.54
2nd Quarter 4.63%
-12.13 5.79 14.24 3.74 2.28 2.43 2.57
-0.70 3.71 0.74
3rd Quarter -3.21% -4.46 -0.01 5.75 1.68 4.26 3.02 2.82 -3.80 0.07 3.94
4th Quarter --
4.90% 5.48 8.99 5.39 -8.06 3.96 1.18 3.38 3.92 5.87
Balanced Index Fund
-- -16.87% 14.20 16.41 21.79 -2.82 13.86
8.81 0.52 10.00 18.11
Balanced Composite
Index --
-16.41% 14.28 17.34 21.87 -2.80 13.93 8.89 0.76 10.06 18.25
Year-End
Assets (Millions)
$9,087 10,268 13,081 11,685 11,143 9,543 10,075 8,495
7,452 7,392 6,938
Fund Facts
Fund Number Ticker Newspaper Listing CUSIP Number Assets (millions)
(Total $48,066) Inception Expense Ratio
(as of 4/2023)
Investor Shares
0002 VBINX Balanced
921931101 $186
11/9/1992
0.18%
Admiral Shares
0502 VBIAX BalAdml
921931200 $38,793
11/13/2000
0.07%
Institutional Shares 0869 VBAIX BalInst
921931309 $9,087
12/1/2000
0.06%
Volatility Measures
R-Squared
Beta
Balanced Composite Index
1.00
1.00
Spliced Total Stock Market Index
0.98
0.69
R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.
Ten Largest Stocks
% of Total Net Assets
Apple Inc.
6.1 %
Microsoft Corp.
5.6
Alphabet Inc.
3.4
Inc.
2.8
NVIDIA Corp.
2.4
Tesla Inc.
1.6
Meta Platforms Inc.
1.6
Berkshire Hathaway Inc.
1.5
Exxon Mobil Corp.
1.1
UnitedHealth Group Inc. Top Ten as % of Common Stock
1.1 27.2 %
Top Ten as % of Total Net Assets
16.7 %
The holdings listed exclude any temporary cash investments and equity index products.
As of September 30, 2023
Vanguard Balanced Index Fund
Fund Asset Allocation
Stocks Bonds Short-term reserves Total
Equity Characteristics
Number of stocks Median market cap Average market cap Price/earnings ratio Price/book ratio Return on equity Earnings growth rate Equity yield (dividend) Foreign holdings Short-term reserves Turnover rate (fiscal year end)
% of Total Net Assets
60.3 % 39.0 0.8 100.0 %
Balanced Index Fund
3,367 $127.8 Billion $545.9 Billion
20.7x 3.5x
22.3% 18.6%
1.6% 0.1% 0.0% 18.9%
CRSP US Total Market
Index
3,761 $127.8 Billion $545.7 Billion
20.7x 3.5x
22.3% 18.6%
1.6% 0.0%
-- --
Distribution by Credit Quality
% of Portfolio
U.S. Government
67.0%
Aaa
3.9
Aa
3.1
A
12.5
Baa
13.5
Less than BBB
0.0
Not Rated
0.0
Total
100.0%
Credit-quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). "NR" is used to classify securities for which a rating is not available. NR securities may include a fund's investment in Vanguard Market Liquidity Fund or Vanguard Municipal Cash Management Fund, each of which invests in high-quality money market instruments and may serve as a cash management vehicle for the Vanguard funds, trusts, and accounts. U.S. Treasury, U.S. Agency, and U.S. Agency mortgage-backed securities appear under "U.S. Government." Credit-quality ratings for each issue are obtained from Bloomberg using ratings derived from Moody's Investors Service (Moody's), Fitch Ratings (Fitch), and Standard & Poor's (S&P). When ratings from all three agencies are available, the median rating is used. When ratings are available from two of the agencies, the lower rating is used. When one rating is available, that rating is used.
Sector Diversification (% of Stocks)
Balanced Index Fund
CRSP US Total Market
Index
Overweight/ Underweight
Basic Materials
2.0%
2.0%
0.0
Consumer Discretionary
14.4
14.4
0.0
Consumer Staples
5.1
5.1
0.0
Energy
4.9
4.9
0.0
Financials
10.5
10.5
0.0
Health Care
12.7
12.7
0.0
Industrials
12.9
12.9
0.0
Other
0.0
0.0
0.0
Real Estate
2.9
2.8
0.1
Technology
29.7
29.8
-0.1
Telecommunications
2.2
2.2
0.0
Utilities
2.7
2.7
0.0
Total
100.0%
100.0%
Sector categories are based on the Industry Classification Benchmark system ("ICB"), except for the "Other" category (if applicable), which includes securities that have not been provided an ICB classification as of the effective reporting period.
As of September 30, 2023
Vanguard Balanced Index Fund
Fixed Income Characteristics
Number of bonds Average effective maturity Average duration
Distribution by Issuer
Asset-Backed Commercial Mortgage-Backed Finance Foreign Government Mortgage-Backed Industrial Treasury/Agency Utilities Other Total
Balanced Index Fund
Bloomberg U.S.
Aggregate Float Adjusted
Index
9,427
13,358
8.7 years
8.4 years
6.3 years
6.1 years
% of Portfolio 0.6% 2.1 9.0 3.6 20.2 15.3 46.1 2.3 0.8
100.0%
Distribution by Effective Maturity
Under 1 Year 1 to 5 Years 5 to 10 Years 10 - 15 Years 15 - 20 Years 20 - 25 Years Over 25 Years Total
% of Portfolio
1.1 % 40.5 % 29.2% 12.6%
5.0 % 4.5 % 7.1 % 100.0 %
As of September 30, 2023
Vanguard Balanced Index Fund As of September 30, 2023
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