Mutual Fund

In: Business and Management

Submitted By ahabicht1
Words 531
Pages 3
Abbey Habicht
Advanced Investments

Vanguard LifeStrategy Moderate Growth Fund

I took a few risk tolerance questionnaires and they all concluded that I have a moderate/average tolerance for risk. One of the questionnaire suggested that people with my risk tolerance should invest in convertible bonds, high-yield junk bonds, large-cap stocks and funds, S&P 500 and Wilshire 5000 stock index funds, and variable annuities invested in large-cap stock sub-accounts ("Investment Risk Tolerance Quiz."). Vanguard’s risk tolerance questionnaire suggested that I should look at funds with a 30/70 bond/stock allocation and after looking at some of the funds they offer I found the Vanguard LifeStrategy Moderate Growth Fund ("Investor Questionnaire”) . I picked this fund because it has non-US stock, making it a world portfolio, and it comes close to my suggested allocation. The fund is composed of 2.38% cash assets, 42.15% US stock, 17.06 Non US stock (59.21% total stock), 37.63% bonds, and .77% other.
In order to see how my fund is doing compared to a benchmark (I chose the Category: Moderate Allocation as my benchmark) we divide the standard deviation of the category by the standard deviation of the managed portfolio and use this percentage to eventually come up with the M2 of .11% which means that the fund is doing better than the Moderate Allocation category overall. We can also look at the risk of VSMGX on Morningstar and it shows that the risk of the fund has been classified as “below average” for the past five years. From this we can see that, in the past years, this fund has had lower risk and somewhat higher returns than other funds in its category ("Vanguard LifeStrategy Moderate Gr Inv.").
The acquired fund fees and expenses are .16% as of February 27, 2014 which is “83% lower than the average expense ratio of funds with similar holdings” ("Vanguard…...

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