Vanguard Star Fund Investor Shares VGSTX

Vanguard Star’s holdings and sub-asset-class allocations have seen changes throughout 2025, but the fund’s strengths remain consistent.

This globally diversified balanced fund has stayed true to its strategic 60/40 stock/bond split, but within those sleeves, investors have seen a more defensive equity posture and exposure to lower-quality bonds. The firm removed small-cap growth strategy Vanguard Explorer, which carries a Morningstar Medalist Rating of Bronze, and added Gold-rated large-cap blend Vanguard Dividend Growth. It also introduced international core equity Vanguard International Core Stock to the existing international value and growth equity fund holdings, while maintaining the 70% US/30% non-US equity split in the equity allocation. On the fixed-income side, Vanguard replaced the strategy’s three investment-grade bond funds with Vanguard Star Core Plus, which launched at the end of the first quarter of 2025 for this strategy’s sole use and rebalancing needs. Vanguard Star Core Plus is managed by the same team and follows the same process as Bronze-rated Vanguard Core Plus.

Before 2025’s changes, the most recent adjustment to Vanguard Star’s underlying fund lineup took place in 2010, when the firm raised the international portion of the equity sleeve to 30% from 20%. Vanguard first incorporated non-US equities into the strategy in 2001, which was also the last time the firm added a fund to the lineup. The fund now invests in nine underlying funds, the majority of which carry an analyst-driven Morningstar Medalist Rating of Bronze, Silver, or Gold, as of November 2025.

Fifteen different subadvisors contribute to the investment funds that underlie Vanguard Star, and Vanguard does not shy away from making adjustments to those subadvisors. 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.

Over the trailing 10-year period ended November 2025, Vanguard Star’s Investor share class’ 8.7% return outpaced its global moderate allocation Morningstar Category average by 183 basis points. The most recent asset-allocation changes will affect how this strategy reacts to different market environments, but the solid underlying fund holdings should continue to give it an edge over the typical peer.

Vanguard Star’s asset-allocation adjustments have led to a more defensive equity sleeve and more credit-heavy bond exposure. These modifications are reasonable and result in an Average Process rating.

Vanguard implemented asset-allocation changes to this strategy in the first six months of 2025. The firm replaced the three bond funds—Short-Term Investment Grade, Long-Term Investment Grade, and GNMA—with Vanguard Star Core Plus, launched in March 2025, specifically for this strategy’s use and rebalancing needs. Vanguard Star Core Plus follows the same process as Bronze-rated Vanguard Core Plus.

On the equity side, it removed the small-cap growth strategy of Vanguard Explorer and added Vanguard Dividend Growth—a large-cap blend fund—to neutralize the growth tilt. It also introduced Vanguard International Core to the lineup, funded by portions of Star’s allocations to Vanguard International Value and International Growth; the three funds are equally weighted within the international stock allocation.

Management last adjusted the fund’s asset allocation in 2010, when it raised the international portion of the equity sleeve to 30% from 20%. Vanguard first incorporated non-US equities into the strategy in 2001, which was also the last time it added a fund to the lineup before 2025. In 2019, the firm merged two underlying funds, Vanguard Morgan Growth and Vanguard US Growth, and the latter continues to be an underlying holding here.

Vanguard Star uses more than 15 subadvisors across nine actively managed Vanguard funds, including Wellington, Baillie Gifford, and Schroders. Adjustments to the subadvisor lineup are fairly common. It removed subadvisor Lazard from Vanguard International Value in July 2025 and from Vanguard Windsor II in December 2025. Altrinsic’s core value approach and Harris Oakmark’s multifaceted value process have replaced Lazard’s sleeves in Vanguard International Value and Vanguard Windsor II, respectively. 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.

This fund will continue to preserve a steady 60%/40% stock/bond split that eschews tactical bets. Over the last decade, Star has generally maintained a slightly higher allocation to equities compared with its global moderate allocation Morningstar Category peers (62.3% of assets versus 58.2%). International equity exposure has stayed at 20% over the last decade, matching competitors in its category. These equity exposures are expected to remain consistent.

Prior to 2025, this fund invested exclusively in investment-grade bonds. Vanguard Star Core-Plus provides a 16% high-yield exposure that exceeds the average peer’s 10%, as of November 2025. At 5.5 years at the end of November 2025, the strategy’s duration (a measure of interest rate risk) is now a little over a year shorter with the asset-allocation update—putting it more in line with the typical peer.

Vanguard Star’s strong underlying fund lineup and skilled subadvisors warrant an Above Average People rating. Most of Vanguard Star’s nine underlying funds carry an Above Average or High People rating as of November 2025. The equity funds particularly stand out: Vanguard US Growth, for example, comprises 12% of assets and earns a Morningstar Medalist Rating of Bronze, as of November 2025; it benefits from subadvisors with skilled investors and sizable resources. In mid-December 2025, Vanguard replaced Lazard, one of Vanguard Windsor II’s four subadvisors, with Harris Oakmark. Another highly regarded holding is Gold-rated Vanguard Dividend Growth, which comprised almost 4% of Star since the second quarter of 2025.

At the oversight level, Matthew Piro, a two-decade Vanguard veteran, has been at the helm of the Oversight and Manager Search team since January 2023. Andrew Shuman works under Piro as the senior investment director in charge of Vanguard Star’s long-term strategy. Shuman began on the team 12 years ago as an analyst. Portfolio managers Michael Roach and Aurelie Denis joined the strategy in February 2023, replacing longtime manager William Coleman, who assumed a new role at the firm. The duo works alongside portfolio manager Walter Nejman, who has been on the strategy since 2013.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

This fund’s long-term performance is competitive. Over the trailing 10 years through November 2025, Vanguard Star’s investor share class returned an annualized 8.7%, outpacing the Morningstar Moderate Target Risk Index and average global moderate allocation Morningstar Category peer by 109 and 183 basis points, respectively. The strategy also outpaced 93% of category peers on a risk-adjusted basis (calculated by Sharpe ratio) over the same period. 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.

Calendar-year results have rebounded after a disappointing 2021 and 2022. During the market rally of 2021, Star’s higher allocation to international equities and longer-duration investment-grade bond exposure were out of favor. Results in 2022 were no better, though in a vastly different market environment: That year, soaring rates hurt longer-duration bonds, and growth-oriented stocks notably trailed value stocks. Returns in 2023 and 2024 were relatively better, with the fund benefiting from growth stocks that returned 4 times as much as their value-oriented counterparts.

Year-to-date returns through November 2025 landed in the middle of its category peers, beating 52% of rivals in that cohort—holdings like Vanguard Primecap and Vanguard International Core have been at the top of their respective categories over the same time period, while the fund’s largest weightings, Vanguard Windsor II and Vanguard US Growth, have been in the 20th and 47th percentile, respectively. The fund’s asset-allocation update in the first half of 2025 resulted in a more defensive equity sleeve and a heftier weight to lower-quality bonds with a duration similar to that of the typical peer’s. The team expects these change to provide a boost to risk-adjusted returns, and investors should expect security selection of the underlying funds to be the primary driver of performance.

Vanguard STAR Inv's Prospectus Adjusted Expense Ratio is 0.29% per year. It places it in the cheapest quintile of the Morningstar US Fund Global Moderate Allocation Category, where the median fee is 0.92% per year. This cost positioning translates into a Medalist Rating Price Score of 2.39, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.