Historic Volatility Measures as of 06/30/2015
|High-Yield Corporate Composite Index||0.97||1.00|
|Barclays U.S. Aggregate Bond Index||0.93||0.92|
*R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.
|Risks Associated with Moderate Funds
Vanguard funds classified as moderate are subject to a moderate degree of fluctuations in share prices. This price volatility may be due to one of several factors: 1) a fund may hold longer-term bonds, which are subject to wide swings in value as interest rates rise and fall; 2) a fund may hold income-oriented common stocks; and 3) a fund may hold a balance of both stocks and bonds. In general, such funds are appropriate for investors who have a relatively long investment horizon (more than five years), are able to tolerate moderate-to-high short-term fluctuations in price, and wish to achieve some combination of current income and modest growth potential.
|Plain Talk About Risk
The portfolio’s share price and total return will fluctuate, along with returns for the overall high-yield bond market, within a wide range, so an investor could lose money over short or even long periods. The portfolio is also subject to:
- Credit risk: The chance that a bond issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
- Income risk: The chance that the fund’s income will decline because of falling interest rates.
- Interest rate risk: The chance that bond prices overall will decline because of rising interest rates.
- Manager risk: The chance that poor security selection or focus on securities in a particular sector, category, or group of companies will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.