Vanguard has launched its first dynamic asset allocation fixed income model portfolios. The new offerings, the Vanguard Fixed Income Risk Diversification and Vanguard Fixed Income Total Return, are now available. They join the firm’s existing lineup of model portfolios.
“We’re excited to expand our model portfolio lineup with the launch of our first dynamic asset allocation fixed income models,” said Brent Beardsley, head of advisor solutions for Vanguard. “These new models leverage Vanguard’s investment and portfolio management expertise to support financial advisors in managing core fixed income assets for their clients.”
The new model portfolios cater to various time horizons and risk profiles. They aim to outperform market-capitalization-weighted benchmarks, specifically the Bloomberg U.S. Aggregate Index and the Bloomberg U.S. Universal Index.
Allocations are recalibrated throughout the year to align with the Vanguard Capital Markets Model (VCMM) 10-year forecasts. This move follows broader industry trends.
Vanguard expands income model offerings
A Cerulli report in November found that 61% of surveyed advisors expect to prefer model portfolios over funds of funds. Vanguard’s investment strategy group oversees the asset allocations for these models, while Vanguard’s fixed income group manages the funds included in each portfolio. The Vanguard Fixed Income Risk Diversification model portfolio has a weighted average expense ratio of 0.05%.
It includes exposure to global investment-grade bonds, which are intended to provide stability against equity market volatility. The Vanguard Fixed Income Total Return model portfolio, designed for wealth accumulation and risk diversification, contains exposure to both global investment-grade and high-yield bonds at a weighted average expense ratio of 0.08%. Vanguard’s Fixed Income Group currently manages $2.6 trillion in assets under management.
This launch comes a week after the firm announced plans to develop multi-asset portfolios with a mix of private and public assets. In January, Vanguard also adjusted the expense ratios for about 43% of its U.S.-based mutual fund and ETF share classes.
Photo by; Katie Harp on Unsplash