New fixed income model portfolios: Capital preservation and active total return

Vanguard has launched two new fixed income model portfolios that complement our existing fixed income models—giving you more options to satisfy a variety of client needs.

Vanguard Fixed Income Capital Preservation Model

This model seeks to mitigate risk from market fluctuations to preserve principal. This portfolio combines short-term credit, intermediate- and short-term Treasuries, and cash reserves to help minimize volatility while aiming to provide modest returns that may help offset inflation over time. It’s a good match for clients who prioritize safeguarding their capital above all else.

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The goal of this approach is to maintain their sense of financial security. Emphasize that while, higher-quality, shorter-term fixed income instruments may generate lower returns, they can help deliver portfolio stability. These instruments are designed to minimize portfolio volatility and ensure that capital remains available as needed.

Vanguard Fixed Income Active Total Return Model

This actively managed model seeks capital appreciation by combining higher quality Treasury and core bonds with lower quality high-yield bonds. This is for clients who like active management and are comfortable with greater volatility in the hopes of greater returns.

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When portfolios are well-diversified, they are more likely to have exposure to whatever is performing well. Any impact from exposure to poorer-performing asset classes will likely be limited and offset by other assets.

Why model portfolios? Models can help you:

Save time
Spend less time on investment selection, due diligence, and administrative tasks while leveraging insights from some of the world’s leading portfolio construction and management experts.

Boost client value and retention
Deepen your client relationships by using the time you save to talk with clients about their ever-changing financial goals.

Grow your business
Onboard new clients more quickly and easily with a total-account solution for younger investors—or implement as a partial solution for more established clients with more complex planning needs.

Increase the value of your practice
Moving client assets into model portfolios with a more uniform investment process helps to boost the value of your practice. 

Notes:

For more information about Vanguard funds or Vanguard ETFs, visit advisors.vanguard.com 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 investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.

U.S. government backing of Treasury or agency securities applies only to the underlying securities and does not prevent share-price fluctuations. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest. 

High-yield bonds generally have medium- and lower-range credit quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit quality ratings.

Investments in bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets. 

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Vanguard does not, and will not, make any representations about whether a model portfolio is in the best interest of any investor, is not, and will not be, responsible for the determination of whether a model portfolio is in the best interests of any investor, and is not acting as an investment advisor to any investor. It is the investment advisor's responsibility to determine the appropriateness of the model portfolios, or any of the securities included therein, for any client.

The Vanguard model portfolios are provided for illustrative and educational purposes only. The Vanguard model portfolios do not constitute research, are not personalized investment advice or an investment recommendation from Vanguard to any client of a third party financial professional and are intended for use only by a third party financial professional, with other information, as a resource to help build a portfolio or as an input in the development of investment advice for its own clients. Such financial professionals are responsible for making their own independent judgment as to how to use the Vanguard model portfolios.