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Vanguard - Risk Attributes

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Vanguard Lifetime Income Program - Total Bond Market Index Portfolio
Risk Attributes

Historic Volatility Measures as of 03/31/2014

BenchmarkR-squared* Beta*
Barclays U.S. Aggregate Bond Index0.991.05
Barclays U.S. Aggregate Bond Index

*R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.

Risks Associated with Conservative to Moderate Funds

Vanguard funds classified as moderate to conservative are subject to low-to-moderate fluctuations in share prices. In general, such funds are appropriate for investors with medium-term investment horizons (four to ten years), for those seeking an investment that emphasizes income rather than growth, and for investors who have a low tolerance for the risk of short-term price fluctuations.


Plain Talk About Risk

The portfolio’s share price and total return will fluctuate, along with returns for the overall bond market, within a wide range, so an investor could lose money over short or even long periods. The portfolio is also subject to:

  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates.
  • Income risk: The chance that the fund’s income will decline because of falling interest rates.
  • 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.
  • Call risk: The chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupons or interest rates before their maturity dates. The fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund’s income.
  • Index sampling risk: The chance that the securities selected for the fund, in the aggregate, will not provide investment performance matching that of the index. Index sampling risk for the fund should be low.

Glossary

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