Vanguard ETF strategic model portfolios

Transcription

1 Vanguard ETF strategic model portfolios FTJ FundChoice Vanguard ETF strategic model portfolios offer: Broad-market equity and investment-grade 1 fixed income exposure, encompassing more than 19,000 global stocks and bonds. Diversified index investments that can help alleviate active manager risk in portfolios through lower return variability and low turnover. ETFs for potential tax efficiency, transparency, and low costs. Remarkably low costs, with weighted average expense ratios ranging from 0.09% to 0.10%, enabling investors to keep more of their returns. Vanguard s 40+ years of experience in portfolio construction and indexing. Strategic asset allocation by product Asset allocation (%) 2 Equity / Fixed income Vanguard ETF Ticker Expense ratio 3 20/80 40/60 60/40 70/30 100/0 Domestic equity x x x Growth VUG 0.08% 4.7% 9.3% 14.0% 16.4% 23.4% Value VTV Small-Cap VB International equity x x x FTSE Developed Markets VEA 0.09% 6.3% 12.6% 18.9% 22.0% 31.5% FTSE Emerging Markets VWO Domestic fixed income x x x Short-Term Bond BSV 0.09% 22.1% 16.6% 11.0% 8.3% 0.0% Inter-Term Bond BIV Long-Term Bond BLV Mortgage-Backed Sec VMBS International fixed income x x x Total International Bond BNDX 0.15% 23.5% 17.6% 11.8% 8.8% 0.0% Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% Asset-weighted expense ratio 0.10% 0.10% 0.09% 0.09% 0.09% 1 A bond whose credit quality is considered to be among the highest by independent bond-rating agencies. 2 The weights were determined based on market characteristics, Vanguard philosophy, and the availability of the ETFs in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%. 3 As reported in each ETF s most recent prospectus as of December 31, The current expense ratio may be higher or lower than the figure shown.

2 Sub-asset allocation by category Asset allocation (%) 1 Equity / Fixed income 1 The weights were determined based on market characteristics, Vanguard philosophy, and the availability of the ETFs in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad ETF to a group of narrower ETFs. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%. 20/80 40/60 60/40 70/30 100/0 Domestic equity x Equity U.S. large-cap 7.8% 15.6% 23.5% 27.5% 39.1% Equity U.S. mid-cap Equity U.S. small-cap International equity x Equity Intl. developed markets 6.3% 12.6% 19.0% 22.1% 31.6% Equity Intl. emerging markets Domestic fixed income x Fixed income U.S. Treasury 22.5% 16.9% 11.2% 8.4% 0.0% Fixed income U.S. government-related Fixed income U.S. corporate Fixed income U.S. securitized Fixed income Other International fixed income x Fixed income International 23.5% 17.6% 11.8% 8.8% 0.0% Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% Model portfolio performance 20/80 40/60 60/40 70/30 100/0 Quarter 1.93% 1.05% 0.15% 0.28% 1.61% Year-to-date year year (annualized) year (annualized) Since inception (annualized) Inception date 1/1/2010 1/1/2010 1/1/2010 1/1/2012 1/1/2010 The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so an investor s shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. Performance of the model ETF components are based on net asset value (NAV) return and assumes a semi-annual rebalance from January 2010 through December 2012, a quarterly rebalance from January 2013 through December 2013, and a monthly rebalance thereafter. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. All figures are for periods ended December 31, 2016, except where noted. Performance figures for periods of less than one year are cumulative returns.

3 Underlying fund performance December 31, 2016 Annualized Expense Since Inception Vanguard ETF Ticker ratio 1 Quarter Year-to-date 1 year 3 year 5 year 10 year inception date Growth VUG 0.08% NAV 0.42% 6.13% 6.13% 7.60% 14.05% 8.14% 7.60% 1/26/2004 Market price Value VTV 0.08% NAV /26/2004 Market price Small-Cap VB 0.08% NAV /26/2004 Market price FTSE Developed Markets VEA 0.09% NAV /20/2007 Market price FTSE Emerging Markets VWO 0.15% NAV /4/2005 Market price FTSE AW ex-us Small-Cap 2 VSS 0.17% NAV /2/2009 Market price Short-Term Bond BSV 0.09% NAV /3/2007 Market price Inter-Term Bond BIV 0.09% NAV /3/2007 Market price Long-Term Bond BLV 0.09% NAV /3/2007 Market price Mortgage-Backed Sec VMBS 0.07% NAV /19/2009 Market price Total International Bond BNDX 0.15% NAV /31/2013 Market price Money market fund 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 vanguard.com/performance. 1 As reported in each ETF s most recent prospectus as of December 31, The current expense ratio may be higher or lower than the figure shown. 2 Vanguard FTSE All-World ex-us Small-Cap ETF (VSS) was removed from the CRSP series of the model portfolios effective December 31, The performance of VSS through that date is embedded in historical model portfolio performance. 3 Citigroup 3-Month T-Bill Index is used to represent performance of a money market fund. The model performance does not include performance of any specific money market fund. Performance data is calculated by obtaining the weighted monthly returns of the strategy component holdings for each period and is based upon the historical asset allocations at the beginning of each month during the periods shown, which may differ from the current allocation. The holdings comprising the strategies and the allocations to those holdings have changed over time and may change in the future. The historical model performance has not been adjusted to reflect current fund allocations. Model performance does not reflect any transaction costs that an investor may incur in implementing the models. All performance results are composite returns showing total returns that are calculated assuming reinvestment of dividends, income, and capital appreciation. While the manager believes this performance accurately reflects the past performance of their investment strategy, past performance is no guarantee of future results.

4 Vanguard Financial Advisor Services P.O. Box 2900 Valley Forge, PA For more information on Vanguard funds and Vanguard ETF Shares, contact your financial advisor to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing. Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. All Vanguard ETFs are subject to risk, including the possible loss of the money you invest. Vanguard does not, and will not, make any representations about the suitability of a model portfolio for any investor; is not, and will not be, responsible for the suitability of a model portfolio for any investor; and is not acting as an investment advisor to any investor. Examples are for hypothetical purposes only. London Stock Exchange Group companies include FTSE International Limited ( FTSE ), Frank Russell Company ( Russell ), MTS Next Limited ( MTS ), and FTSE TMX Global Debt Capital Markets Inc. ( FTSE TMX ). All rights reserved. FTSE, Russell, MTS, FTSE TMX, FTSE Russell, and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX, and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor their licensors for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty, or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Global Small Cap ex US, FTSE Developed All Cap ex US Transition, and FTSE Emerging Markets All Cap China A Transition indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put. Financial advisors: Visit advisors.vanguard.com or call Investment Products: Not FDIC Insured No Bank Guarantee May Lose Value 2017 The Vanguard Group, Inc. All rights reserved. U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623. Vanguard Marketing Corporation, Distributor. FAMPFTJ

5 Vanguard strategic model portfolios FTJ FundChoice Vanguard strategic model portfolios offer: Broad-market equity and investment-grade 1 fixed income exposure, encompassing more than 19,000 global stocks and bonds. Diversified index investments that can help alleviate active manager risk in portfolios through lower return variability. Remarkably low costs, with weighted average expense ratios ranging from 0.09% to 0.11%, enabling investors to keep more of their returns. Vanguard s 40+ years of experience in portfolio construction and indexing. Strategic asset allocation by product Asset allocation (%) 2 n Equity / n Fixed income Vanguard Fund Ticker Expense ratio 3 20/80 40/60 60/40 70/30 100/0 Domestic equity Growth Index VIGAX 0.08% 4.7% 9.3% 14.0% 16.4% 23.4% Value Index VVIAX Small-Cap Index VSMAX International equity Developed Markets Index VTMGX 0.09% 6.3% 12.6% 18.9% 22.0% 31.5% Emerging Markets Stock Index VEMAX Domestic fixed income Short-Term Bond Index VBIRX 0.09% 22.1% 16.6% 11.0% 8.3% 0.0% Inter-Term Bond Index VBILX Long-Term Bond Index VBLTX Mortgage-Backed Securities Index VMBSX International fixed income Total International Bond Index VTABX 0.14% 23.5% 17.6% 11.8% 8.8% 0.0% Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% Asset-weighted expense ratio 0.11% 0.10% 0.10% 0.09% 0.09% 1 A bond whose credit quality is considered to be among the highest by independent bond-rating agencies. 2 The weights were determined based on market characteristics, Vanguard philosophy, and the availability of the funds in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad fund to a group of narrower funds. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%. 3 As reported in each fund s most recent prospectus as of December 31, The current expense ratio may be higher or lower than the figure shown.

6 Sub-asset allocation by category Asset allocation (%) 1 n Equity / n Fixed income Domestic equity 20/80 40/60 60/40 70/30 100/0 Equity U.S. large-cap 7.8% 15.6% 23.4% 27.3% 39.0% Equity U.S. mid-cap Equity U.S. small-cap International equity Equity Intl. developed markets 6.2% 12.5% 18.8% 21.9% 31.3% Equity Intl. emerging markets Domestic fixed income Fixed income U.S. Treasury 22.4% 16.8% 11.2% 8.4% 0.0% Fixed income U.S. government-related Fixed income U.S. corporate Fixed income U.S. securitized Fixed income Other International fixed income Fixed income International 23.5% 17.6% 11.8% 8.8% 0.0% Money market fund 2.0% 2.0% 2.0% 2.0% 2.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 1 The weights were determined based on market characteristics, Vanguard philosophy, and the availability of the funds in the Vanguard lineup. Some of the investable universe may be lost when moving from a broad fund to a group of narrower funds. Portfolio weights were determined by dividing the market value of the underlying benchmark by the total market value of all the underlying benchmarks within the asset group. Because of rounding, weights may not add up to 100%. Model portfolio performance 20/80 40/60 60/40 70/30 100/0 Quarter 1.94% 1.05% 0.15% 0.28% 1.61% Year-to-date year year (annualized) year (annualized) Since inception (annualized) Inception date 1/1/2010 1/1/2010 1/1/2010 1/1/2012 1/1/2010 The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so an investor s shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. Performance of the model fund components are based on net asset value (NAV) return and assumes a semiannual rebalance from January 2010 through December 2012, a quarterly rebalance from January 2013 through December 2013, and a monthly rebalance thereafter. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. All figures are for periods ended December 31, 2016, except where noted. Performance figures for periods of less than one year are cumulative returns.

7 Underlying fund performance Annualized Vanguard fund Ticker Expense ratio 1 Quarter Year-to-date 1 year 3 year 5 year 10 year Since inception Inception date Growth Index VIGAX 0.08% 0.42% 6.12% 6.12% 7.60% 14.05% 8.14% 4.67% 11/13/2000 Value Index VVIAX 0.08% /13/2000 Small-Cap Index VSMAX 0.08% /13/2000 Developed Markets Index VTMGX 0.09% /17/1999 Emerging Markets Stock Index VEMAX 0.15% /23/2006 FTSE All-World ex-us VFSVX 0.31% /2/2009 Small-Cap Index 2 Short-Term Bond Index VBIRX 0.09% /12/2001 Inter-Term Bond Index VBILX 0.09% /12/2001 Long-Term Bond Index VBLTX 0.16% /1/1994 Mortgage-Backed Securities Index VMBSX 0.10% /3/2009 Total International Bond Index VTABX 0.14% /31/2013 Money market fund 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 vanguard.com/performance. 1 As reported in each fund s most recent prospectus as of December 31, The current expense ratio may be higher or lower than the figure shown. 2 Vanguard FTSE All-World ex-us Small-Cap Fund (VFSVX) was removed from the CRSP series of the model portfolios effective December 31, The performance of VFSVX through that date is embedded in historical model portfolio performance. 3 Citigroup 3-Month U.S. Treasury Bill Index is used to represent performance of a money market fund. The model performance does not include performance of any specific money market fund. Performance data are calculated by obtaining the weighted monthly returns of the strategy component holdings for each period and are based upon the historical asset allocations at the beginning of each month during the periods shown, which may differ from the current allocation. The holdings comprising the strategies and the allocations to those holdings have changed over time and may change in the future. The historical model performance has not been adjusted to reflect current fund allocations. Model performance does not reflect any transaction costs that an investor may incur in implementing the models. All performance results are composite returns showing total returns that are calculated assuming reinvestment of dividends, income, and capital appreciation. While the manager believes this performance accurately reflects the past performance of their investment strategy, past performance is no guarantee of future results.

8 Vanguard Financial Advisor Services TM P.O. Box 2900 Valley Forge, PA For more information on Vanguard funds or Vanguard ETF Shares, contact your financial advisor to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing. All Vanguard funds are subject to risk, including the possible loss of the money you invest. Vanguard does not, and will not, make any representations about the suitability of a model portfolio for any investor; is not, and will not be, responsible for the suitability of a model portfolio for any investor; and is not acting as an investment advisor to any investor. Examples are for hypothetical purposes only. London Stock Exchange Group companies includes FTSE International Limited ( FTSE ), Frank Russell Company ( Russell ), MTS Next Limited ( MTS ), and FTSE TMX Global Debt Capital Markets Inc. ( FTSE TMX ). All rights reserved. FTSE, Russell, MTS, FTSE TMX, FTSE Russell, and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX, and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor their licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty, or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Global Small Cap ex US, FTSE Developed All Cap ex US, and FTSE Emerging Markets All Cap China A Inclusion Indexes or the fitness or suitability of the Indexes for any particular purpose to which they might be put. Financial advisors: Visit advisors.vanguard.com or call Investment Products: Not FDIC Insured No Bank Guarantee May Lose Value 2017 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor. FAFTJMF