When you buy any of the four Vanguard target-risk mutual funds, called LifeStrategy funds, you gain access to a diverse mix of Vanguard’s low-cost index funds that is aimed at a unique investment objective.
Vanguard target-risk funds are what the investment community refer to as funds of funds. As the name suggests, rather than hold a portfolio of stocks or bonds, a fund of funds holds other mutual funds. With Vanguard’s LifeStrategy funds, investors can choose among four target-risk categories, which are broken down into conservative, growth, income, and moderate growth.
Each of Vanguard’s LifeStrategy funds holds a unique asset allocation and blend of four Vanguard index funds:
- Vanguard Total Stock Market Index (MUTF:VTSMX)
- Vanguard Total Bond Market II (MUTF:VTBIX)
- Vanguard Total International Stock Index (MUTF:VTIAX)
- Vanguard Total International Bond Index (MUTF:VTABX).
In summary, each of Vanguard’s LifeStrategy funds has a target-risk allocation that is some combination of U.S stocks, international stocks, U.S. bonds and international bonds.
Vanguard LifeStrategy Target-Risk Funds
Vanguard LifeStrategy Income Fund (MUTF:VASIX): Investors looking to focus mostly on income with little or no need for long-term growth will prefer VASIX over the other LifeStrategy funds in the lineup. The asset allocation target is a conservative blend of 20% stocks and 80% bonds. The minimum initial investment is $3,000 and the expenses are 0.12%, or $12 for every $10,000 invested.
Vanguard LifeStrategy Conservative Growth (MUTF:VSCGX): Vanguard’s VSCGX can be a smart choice for investors that need income but would also like some growth that can keep pace with inflation. The target asset allocation for VSCGX is 40% stocks and 60% bonds. The minimum initial investment is $3,000 and the expenses are 0.13%.
Vanguard LifeStrategy Moderate Growth (MUTF:VSMGX): This fund is ideal for investors looking for long-term growth that can outpace inflation but at risk levels below that of an aggressive portfolio. The target asset allocation for VSMGX is 60% stocks and 40% bonds. The minimum initial investment is $3,000 and the expenses are 0.14%.
Vanguard LifeStrategy Growth (MUTF:VASGX): Investors that want to focus primarily on long-term growth with moderately-aggressive risk will prefer this LifeStrategy option. The target asset allocation is 80% stocks and 20% bonds, which enough to capture the growth potential of stocks while taking the edge off the market risk compared to a portfolio of 100% stocks. The minimum initial investment is $3,000 and the expenses are 0.14%.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.