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Vanguard - Risk Attributes

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Vanguard Lifetime Income Program - High Yield Bond Portfolio
Risk Attributes

Historic Volatility Measures as of 03/31/2014

BenchmarkR-squared* Beta*
Barclays U.S. Corporate High Yield Bond Index0.960.88
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 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.

Glossary

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