Investors may not be adequately rewarded for equity risk in the years ahead. In this short video, Vanguard Global Head of Portfolio Construction Roger Aliaga-Díaz shares why we’re leaning more conservative in our time-varying asset allocation (TVAA) portfolio—favoring a 40% stock and 60% bond mix over the traditional 60/40 approach.
With stretched equity valuations and interest rates above the rate of inflation, our models project that a 40/60 portfolio could achieve comparable returns to a 60/40 over the next decade, but with less risk. We’re a bit more conservative within each asset class as well.
Watch the video to see how we’re balancing risk and return in today’s market environment.
Notes:
- All investing is subject to risk, including the possible loss of the money you invest. 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. Diversification does not ensure a profit or protect against a loss.
- Investments in bonds are subject to interest rate, credit, and inflation risk.
- Investments in stocks and 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.
Related items
Notes:
- All investing is subject to risk, including the possible loss of the money you invest. 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. Diversification does not ensure a profit or protect against a loss.
- Investments in bonds are subject to interest rate, credit, and inflation risk.
- Investments in stocks and 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.
