Manager perspectives

How investor behavior factors into our TDF portfolio plan

August 01, 2023

What is Vanguard’s approach to constructing target-date funds? What differentiates Vanguard Target Retirement Funds from their competitors?
There have been some recent changes to the named portfolio managers on Vanguard’s multiasset funds of funds, including Target Retirement Funds. Those changes include the addition of your roles. Tell us about your backgrounds—how you came to Vanguard, the experiences you’ve had here, and finally your expectations for how these changes could enhance investor outcomes.
What criteria do you consider when constructing an asset allocation strategy? Are there particular investment types best suited for these portfolios? Are there investments you aim to avoid?
Target-date funds can be seemingly complex by nature, developed to carry an investor through the asset accumulation, protection, and ultimately distribution phases of a wealth journey. What steps does Vanguard take to develop, monitor, and update a glide path aimed at balancing risk and return through various life phases?

The VLCM framework

A graphic that depicts the Vanguard Life-Cycle Model framework. Four inputs--including investor goal, investor risk preferences, investor demographic characteristics, and Vanguard Capital Markets Model projections—lead to the evaluation of thousands of potential paths, then the selection of the one that offers the best balance between amount of volatility and lifetime spending.
How do target-date funds—and Vanguard Target Retirement Funds in particular—perform during different market environments? Do you make changes to asset allocation as market conditions change? Why or why not?
Vanguard as a company was built upon the idea that cost savings can dramatically increase an investor’s overall chance of success. In what ways do Vanguard Target Retirement Funds help return value to shareholders?

How Vanguard returns value to shareholders by lowering costs and reinvesting in the business

A graphic that displays the 70% expense ratio deduction among Vanguard multiasset funds from the time of their inception in 2003 through year end 2022.
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Meet the experts

Michael Roach, CFA
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