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This Vanguard Fund Is a Good One-Stop Option

Vanguard Star has a sturdy foundation.

Bronze Medalist Illustration

Key Morningstar Metrics for Vanguard Star

  • Morningstar Medalist Rating: Bronze
  • Process Pillar: Average
  • People Pillar: Above Average
  • Parent Pillar: High

Vanguard Star VGSTX continues to benefit from a solid set of underlying funds and subadvisors.

This globally diversified balanced fund stays true to its strategic 60/40 stock/bond split, eschewing tactical allocation tilts. Over the last decade, the fund has consistently invested in 10 actively managed Vanguard funds. The most recent strategic allocation change was in 2010, when the firm raised the international portion of the equity sleeve to 30% from 20%. Vanguard first incorporated non-U.S. equities into the strategy in 2001, which was also the last time the firm added a fund to the lineup. Eight of the 10 underlying funds carry an Above Average or High People Pillar rating as of December 2023, owing to dependable subadvisors and prominent investment talent. Although conviction in the equity funds is stronger, the overall lineup is solid.

About two dozen subadvisors contribute to the investment funds that underlie Vanguard Star, including Wellington, Lazard, Baillie Gifford, and Aristotle, and Vanguard does not shy away from making adjustments to those subadvisors. In mid-2023, Vanguard removed subadvisor Vanguard Quantitative Equity Group from Vanguard U.S. Growth VWUSX to make it a higher-conviction, more concentrated portfolio. The firm reallocated the roughly 20% of portfolio assets in Vanguard U.S. Growth to existing subadvisor Wellington Management, which now manages half of the portfolio. The number of subadvisors, along with the frequency of changes on the subadvisor level, adds a layer of variability, but management oversight has been diligent.

Matthew Piro, a two-decade Vanguard veteran, became the global head of oversight and manager search team in January 2023. Piro succeeded Dan Newhall, who served in that position for roughly 20 years before moving to another part of the firm in 2022. Piro joined Newhall’s team as an analyst in 2008 and worked there for around eight years. The transition is appropriate considering Piro’s experience and familiarity with the group.

Vanguard Star: Performance Highlights

This fund’s long-term performance is competitive. Over the trailing 10 years through December 2023, Vanguard Star’s investor share class returned an annualized 7.2%, outpacing the Morningstar Moderate Target Risk Index and median moderate-allocation peer by 145 and 74 basis points, respectively. The strategy also landed in the best-performing third of its peers on a risk-adjusted basis, as calculated by Sharpe ratio. The portfolio’s growth lean and longer duration have acted as tailwinds over the last decade, while the greater exposure to international stocks and higher-quality bonds dragged on returns.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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