Vanguard's framework for constructing diversified portfolios

May 7, 2013


The best strategy for meeting long-term financial goals is to have a well-thought-out plan focused on diversification and be disciplined about maintaining it. A new Vanguard research paper discusses six major components of portfolio construction: defined investment goals and constraints; broad strategic asset allocation; sub-asset allocation; indexed and/or actively managed strategies; allocation of investments in taxable and/or tax-advantaged accounts; and the selection of individual managers, funds, or securities to fill allocations.

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All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. We recommend that you consult a tax or financial advisor about your individual situation.


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