Historic Volatility Measures as of 05/31/2015
|Variable Insurance Balanced Composite Index||0.95||0.96|
|Dow Jones U.S. Total Stock Market Index||—||—|
*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 total return, like the prices of stocks and bonds generally, will fluctuate within a wide range, so an investor could lose money over short or even long periods. The portfolio is also subject to:
- Stock market risk: The chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising stock prices and periods of falling stock prices.
- Investment style risk: The chance that returns from mid- and large-capitalization stocks will trail returns from the overall stock market. Historically, mid-cap stocks have been more volatile in price than the large-cap stocks that dominate the overall market, and they often perform quite differently. Mid-cap stocks tend to have greater volatility than large-cap stocks because, among other things, medium-size companies are more sensitive to changing economic conditions.
- Interest rate risk: The chance that bond prices overall will decline because of rising 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.
- 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.