An investor-centered glide path
Designed to balance growth, risk, and real-world retirement income needs
Participant population characteristics
Vanguard Capital Markets Model® (VCMM)
The VCMM is a proprietary financial simulation tool developed and maintained by Vanguard’s primary investment research team. VCMM projections are composed of distributions of expected returns, volatilities, and correlations to evaluate potential downside risks, various risk-return trade-offs, and the diversification benefits of various asset classes.
Most investors have multiple goals throughout their lifetime, and the VLCM factors in each complex, interconnected decision about saving, spending, and asset allocation.
Positive retirement outcomes are the focus of our framework. We use multiple inputs to create the framework, with a goal of striking a balance between two primary objectives of investment portfolios: growth to provide wealth for retirement spending needs and stability to lessen investor anxiety in volatile markets, particularly for those near or in retirement.
We use the VLCM to generate glide-path results representing different lifestyle personas in retirement to evaluate its sufficiency in supporting the income needs associated with each persona.
Our glide-path default is set to help ensure participants have the savings necessary to maintain their lifestyle through retirement. This gives us a reliable picture of what an actual average participant looks like. From there, we can tailor the design to a specific lifestyle based on each participant cohort.
Participants’ ability to meet long-term goals for having enough money to see them through retirement is our focus when evaluating the benefits of TDFs in retirement plans:
- Wealth accumulation: Optimizing outcomes through our time-tested investment techniques helps give participants a better chance for lasting income through retirement.
- Portfolio volatility: Balancing risk and return offers retirement confidence for participants.
- Maximum drawdown: Weathering tough times during notable market downturns helps preserve retirement savings.
For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
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.
Investments in Target Retirement Trusts and Funds are subject to the risks of their underlying funds. The year in the trust or fund name refers to the approximate year (the target date) when an investor in the trust or fund would retire and leave the workforce. The trust or fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Income Trust/Fund and the Income and Growth Trust have fixed investment allocations and are designed for investors who are already retired. An investment in a Target Retirement Trust or Fund is not guaranteed at any time, including on or after the target date.
Vanguard is responsible only for selecting the underlying funds and periodically rebalancing the holdings of target-date investments. The asset allocations Vanguard has selected for the Target Retirement Funds are based on our investment experience and are geared to the average investor. Regularly check the asset mix of the option you choose to ensure it is appropriate for your current situation.
Vanguard Target Retirement Trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.