Vanguard target-date retirement portfolios can be built with 4 ETFs. They are exposed to between 40% and 90% equities. There are low-risk, medium-risk, and high-risk portfolios.
For the past 10 years, the Vanguard Target Retirement 2050 (35 years old) has returned 9.8 with a standard deviation of 15.22. The dividend yield is 2.0. The 30-year return is 8.57%. Year to date the Vanguard Target Retirement 2050 (35 years old) has returned 1.61%.
Article Contents
- What is the return of the Vanguard target-date retirement portfolios?
- How do you build the Vanguard target-date retirement portfolios with ETFs?
- Who is Vanguard?
- Description of Vanguard target-date retirement portfolios
- Asset Allocation for Vanguard target-date retirement portfolios
- How we select the right ETFs
- Resources for Vanguard target-date retirement portfolios
- Related questions
What is the return of the Vanguard target-date retirement portfolios?
Below you can see the performance of the Vanguard target-date funds. Please note that we are not yet factoring in the target date glide path in our calculations.Name | Asset class count | Year to date | Return in 2020 | 10 year return | CAGR since 1989 (%) | Risk level | Expense ratio |
---|---|---|---|---|---|---|---|
S&P 500 | 1 | 0.39 | 18.29 | 13.84 | 10.77 | 3 | 0.03% |
Vanguard Target Retirement 2030 (55 year old) | 4 | 1.12 | 14.01 | 8.62 | 8.23 | 2 | 0.05% |
Vanguard Target Retirement 2040 (45 year old) | 4 | 1.49 | 15.55 | 9.52 | 8.51 | 3 | 0.05% |
Vanguard Target Retirement 2050 (35 year old) | 4 | 1.61 | 16.04 | 9.8 | 8.57 | 3 | 0.05% |
Vanguard Target Retirement 2060 (25 year old) | 4 | 1.61 | 16.03 | 9.79 | 8.57 | 3 | 0.05% |
How do you build the Vanguard target-date retirement portfolios with ETFs?
This is for the Vanguard Target Retirement 2050 (35 years old) as it looked like in 2018. Target-date fund change their asset allocation each year so please consult the prospectus to see the exact allocation- 54.00% US Total Stock Market (VTI)
- 35.90% International All-World ex-US (VEU)
- 7.10% Total US Bond Market (BND)
- 3.00% Non-US Bonds (BNDX)
Who is Vanguard?
Vanguard is the fund management company founded by the supreme good guy of investing John C. Bogle. Vanguard has a unique governance structure that makes it so that Vanguard’s only mission is to look out for those who own shares of the mutual funds. John Bogle has structured Vanguard in such a way that the owners of shares are also the owners of Vanguard. The investors (owner) are all those people who own a Vanguard mutual fund or ETF. John Bogle calls it the only mutual mutual fund company. One of John Bogle’s best books is his Common Sense on Mutual Funds. I recently completed a history of the Vanguard which was very good. It is called The Man in the Arena: Vanguard Founder John C. Bogle and His Lifelong Battle to Serve Investors First “The book is part tribute to Mr. Bogle, part history, and part investment wisdom. The breadth of the tributes extends beyond the finance world of managers and writers, to heavyweight economists, such as Paul Volcker, and all the way to a former resident of the White House, Bill Clinton. The history spans the time period from the founding of Vanguard and its unique mutual ownership to the launching of the first no-load mutual funds and index funds. I personally loved the poster that declared “Index funds are un-American.” https://www.youtube.com/watch?v=JiPHXDf0xUsDescription of Vanguard target-date retirement portfolios
The Vanguard target-date funds are made of other funds. They are funds of funds in other words. This is the standard and smart way of constructing a target-date fund. Many if not most other target-date funds are constructed this way, fx, Dimensional Fund Advisors, BlackRock, and Fidelity.
Asset Allocation for Vanguard target-date retirement portfolios
Vanguard Target Retirement 2030 (55 years old)
- 42.20% US Total Stock Market (VTI)
- 28.00% International All-World ex-US (VEU)
- 20.90% Total US Bond Market (BND)
- 8.90% Non-US Bonds (BNDX)
Vanguard Target Retirement 2040 (45 years old)
- 51.20% US Total Stock Market (VTI)
- 33.90% International All-World ex-US (VEU)
- 10.50% Total US Bond Market (BND)
- 4.40% Non-US Bonds (BNDX)
Vanguard Target Retirement 2050 (35 years old)
- 54.00% US Total Stock Market (VTI)
- 35.90% International All-World ex-US (VEU)
- 7.10% Total US Bond Market (BND)
- 3.00% Non-US Bonds (BNDX)
Vanguard Target Retirement 2060 (25 years old)
- 53.90% US Total Stock Market (VTI)
- 36.10% International All-World ex-US (VEU)
- 7.10% Total US Bond Market (BND)
- 2.90% Non-US Bonds (BNDX)
How we select the right ETFs
There are a lot of ETFs out there. Most of them can be discarded because:
- They are too expensive
- They hold too few assets and are therefore too illiquid
- They do not meet the criteria for representing the asset class they are supposed to mirror.
We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?
If you are a European investor you need to buy European ETFs. We list 47 best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).
As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.
You can find the socially responsible investing ESG ETFs in the same article.
Resources for Vanguard target-date retirement portfolios
It is always a pleasure to read any of John Bogle’s book so any book by him is recommended. These two are good starting points.- John Bogle – Common Sense on Mutual Funds
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
Related questions
Which Vanguard Target Retirement Fund is best?
The best Vanguard Target Retirement Fund is the fund that has the approximate date for your retirments. If you intend to retire in 2060 then the best fund is 2060.
Which Vanguard fund has the highest return?
Accordig to Vanguard their Primecap fund has had an annual return of 13.41% since 1984. The Primecap fund is closed to new investors.
The Vanguard U.S Growth fund has had an annual return of 10.99%.