The Vanguard Balanced Index Fund lives up to its name. With 60% of its assets in stocks and 40% in bonds, it is in fact, quite balanced. Even though the fund is not open for new investors anymore, you can buy Admiral shares under a separate class of shares as long as you invest a minimum of $3,000. It is definitely one of the best Vanguard funds available for investment today. The fund’s allocations are based around two broad indices. The stocks section is based on the CRSP U.S. Total Market Index, and the bond section tracks the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. The CRSP U.S. Total Market Index represents all the stocks traded on the NASDAQ and the NYSE (New York Stock Exchange). Large-cap, mid-cap, small-cap, and micro-cap stocks are all included. The Bloomberg Barclays U.S. Aggregate Float Adjusted Index consists of fixed-income securities of investment-grade that have maturities of more than one year.
Vanguard Balanced Index Fund: All You Need To Know
When was the Vanguard Balanced Index Fund launched?
The Vanguard Balanced Index Fund was launched in November 1992. The fund’s parent company, Vanguard is the largest provider of mutual funds across America. Vanguard offers a wide variety of exchange traded funds (ETFs) and mutual funds. Vanguard is very well known for its vast selection of low-cost index products. However, Vanguard also offers a lot of actively managed funds. The low-cost approach of the firm has led to a consistent inflow of assets into its funds in recent times. As of 2020, the fund has $39.57 billion worth of assets under management (AUM). The money is invested across a total of 13,313 holdings.
Vanguard Balanced Index Fund: Investment Strategy
Vanguard Balanced Index Fund managers usually go with a 60/40 allocation. The fund samples target indices (also known as the indexing investment approach). According to Vanguard, 60% of the fund’s assets are aimed to measure the returns of the US Stock market. The remaining 40% tracks the performance of a “broad, market-weighted bond index.”.
Vanguard Balanced Index Fund: Role in Portfolio
The Vanguard Balanced Index Fund is low cost and domestically balanced. Since the fund consists of stocks as well as bonds, it keeps generating income as it grows. Therefore, if you are an investor who is seeking growth while generating income, you should seriously consider it as a core holding in your portfolio.
Vanguard Balanced Index Fund: Advantages
The biggest advantage of a balanced fund is the diversification options that it provides the investors with. This can be utilized as a core holding within a portfolio. The highly diversified Vanguard Balanced Index Fund is quite safe from market volatility and it avoids suffering a substantial impact on the returns.
Over the last year, the fund has generated returns of 7.26%, while over the last three years, it has generated 8.81 percent. It has also generated 7.27% over the last five years and 11.07% over the last 10 years.
Vanguard Balanced Index Fund: Management
A team of three managers manages the Vanguard Balanced Index Fund. Those managers are: Joshua C. Barrickman, who has been with Vanguard since 1998, has co-managed the fund since 2013, William A. Coleman and Gerard C. O’Reilly (both of whom joined in 2016)
Vanguard Balanced Index Fund: Performance
The fund has returned 7.26 percent over the past year, 8.81 percent over the past three years, 7.27 percent over the past five years, and 11.07 percent over the past decade. When compared to its peers, the Vanguard Balanced Index Fund has performed better. The chief contributor to its success is Vanguard’s low-cost approach.
Vanguard Balanced Index Fund: Fees
The expense ratio of the Vanguard Balanced Index Fund is 0.18 percent. Even though the fund is closed, potential investors can purchase Admiral shares for a minimum of $3,000 under symbol VBIAX. Even though this class of shares requires a higher minimum investment, the expense ratio offered by it is lower.
Vanguard Balanced Index Fund: Risk
As 60% of the fund is allocated to stocks, the returns are somewhat susceptible to market volatility. On top of that, the rest of the 40% issued in bonds can face interest rate risk or worse, the possibility of defaulting in case the issuer suffers financially. While bonds provide a steady income in general, the growth rate is usually lower than a fund that has a larger share of stocks. However, a steady income from bonds can reduce the overall risk associated with market volatility.