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Vanguard - Risk Attributes

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Vanguard High Yield Bond Portfolio
Risk Attributes

Historic Volatility Measures as of 03/31/2014

BenchmarkR-squared* Beta*
Barclays U.S. Corporate High Yield Bond Index0.970.89
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.
  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the fund because it invests primarily in short- and intermediate-term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds.
  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates.
  • Liquidity risk: The chance that the fund could experience difficulties in valuing and selling illiquid high-yield bonds or loans. In the event that the fund needs to sell a security during periods of infrequent trading of the security, it may not receive full value for the security.
  • 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

For more information about The Vanguard 529 College Savings Plan, download a Program Description or request one by calling 866-734-4530. The Program Description includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter. Please note: Before investing in any 529 plan, you should consider whether your or the beneficiary's home state offers a 529 plan that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state's 529 plan. You also should consult your financial, tax, or other adviser to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state's 529 plan[s], or any other 529 plan, to learn more about those plans' features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by State Treasurer Kate Marshall. 

The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Upromise Investments, Inc., serves as Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the Plan.

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