Vanguard's LifeStrategy Target-Risk Series Has an Edge

Stefan Sayre: Vanguard's patented approach of straightforward and robust portfolio design, combined with lower fees, gives its Gold-rated LifeStrategy target-risk series an edge.

There are four separate Vanguard LifeStrategy funds in this series. They maintain static equity allocations, which range between 80% and 20%, and hold the balance in bonds. Four highly rated Vanguard index funds underlie each offering. These provide exposure to U.S. and international equity and fixed-income markets. The fixed-income sleeve does have a higher quality and longer duration than most peers, and this may lead the portfolio to lag in credit rallies and in times of rising interest rates. However, we believe it should provide ample protection during periods of market stress.

The funds are capably overseen by Vanguard’s Strategic Asset Allocation Committee and Investment Strategy Group, who also manage Vanguard’s excellent target-date series. This target-risk series’ performance has been strong over long periods. Each fund ranks in the second quartile of its category over 10- and 15-year trailing periods through the end of February 2019. Future performance should continue to be bolstered by the funds’ lower fees, which are around 70 basis points lower than those of their average peers.