View source for Vanguard LifeStrategy Funds

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The '''{{PAGENAME}}''' are lifecycle offerings, providing investors with a variety of highly diversified all-in-one portfolios. The products are structured as [[Fund of funds | funds-of-funds]], charging only [[Acquired fund fees and expenses|weighted averages]] of the [[Expense ratios | expense ratios]] associated with the underlying [[Indexing|index]] funds.<ref>[https://personal.vanguard.com/us/funds/vanguard/LifeStrategyList Lifestrategy Funds], Vanguard official site</ref> 

LifeStrategy funds are cheap by any reasonable standard. In contrast to the Vanguard series of similar one fund  diversified portfolios, [[ Vanguard Target Retirement Funds |target retirement funds]], which utilize a gradual shifting strategic asset allocation over time, the LifeStrategy funds have a fixed target asset allocation.

Vanguard considers the LifeStrategy funds to be'' target risk funds'', in contrast to ''target date'' target retirement funds. 
{{See also|Vanguard funds: life strategy funds vs target retirement funds}}

==Four portfolios==
While the Funds are ostensibly designed for investors having a certain level of risk tolerance (approximately), and are typically considered to be retirement accumulation or retirement decumulation vehicles, they may be used for other goals, depending on a particular shareholder's objectives. For example, the LifeStrategy funds are often investment options in many state run [[529 plans]] designed for funding college education expenses.

There are four LifeStrategy funds:
 
{| class="wikitable" style="text-align: center"
|-
! Fund !! Ticker !! Vanguard link !! Morningstar link
|-
| align= "left"| Vanguard LifeStrategy Income Fund || VASIX  || [https://personal.vanguard.com/us/funds/snapshot?FundId=0723&FundIntExt=INT link] || {{MStarFundLink|VASIX}}
|-
| align= "left"| Vanguard LifeStrategy Conservative Growth Fund || VSCGX  || [https://personal.vanguard.com/us/funds/snapshot?FundId=0724&FundIntExt=INT link] || {{MStarFundLink|VSCGX}}
|-
| align= "left"| Vanguard LifeStrategy Moderate Growth Fund  || VSMGX  || [https://personal.vanguard.com/us/funds/snapshot?FundId=0914&FundIntExt=INT link] ||{{MStarFundLink|VSMGX}}
|-
| align= "left"| Vanguard LifeStrategy Growth Fund || VASGX  || [https://personal.vanguard.com/us/funds/snapshot?FundId=0122&FundIntExt=INT link] || {{MStarFundLink|VASGX}}
|}

==Fund allocations==

On February 26, 2015, Vanguard announced an increase in the funds' international equity allocation from 30% to 40% of equity exposure, and an increase in  the international fixed income allocation from 20% to 30% of nominal fixed income exposure.<ref>[https://personal.vanguard.com/us/insights/article/fund-announcement-02262015 Vanguard enhances diversification for target date funds and other all-in-one funds] 26 Feb 2015</ref>

The allocations of the funds after the 2015 resetting are set forth in the table below. The reallocation of fund assets was completed by the end of 2015.<ref>[https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/NewsInstinfo022615QA 2015 changes to Target Retirement Funds, Q&A], Vanguard Institutional, February 26, 2015. Reviewed 28 February 2015.</ref>

{| border="1" cellspacing="1" cellpadding="10" align="center"
|+ '''''LifeStrategy Funds Target Asset Mix'''''
! Holding !! style="background:#f0f0f0;" | Growth [[File:LSGrowth2015.png|200px]] !! style="background:#f0f0f0;" | Moderate Growth [[File:LSModerate2015.png ‎|200px]] !! style="background:#f0f0f0;" | Conservative Growth [[File:LSconservative2015.png|200px]] !! style="background:#f0f0f0;" | Income [[File:LSincome2015.png|220px]] 
|-
| style="background:#f0f0f0;" | US <br>Stocks ||align="center"|48% ||align="center"| 36% ||align="center"|24% ||align="center"|12%
|-
| style="background:#f0f0f0;" | International Stocks ||align="center"| 32% ||align="center"| 24% ||align="center"| 16% ||align="center"| 8%
|-
| style="background:#f0f0f0;" | US Bonds - Intermediate Term ||align="center"| 14% || align="center"|28% || align="center"|42% ||align="center"| 56%
|-
| style="background:#f0f0f0;" | International Bonds - Intermediate Term ||align="center"| 6% || align="center"|12% || align="center"|18% ||align="center"| 24%
|-
|}

==Drawbacks==
While LifeStrategy Funds provide very simple diversification for their shareholders, such uniform solutions will necessarily be subject to reasonable criticisms.

===Tax inefficiency===
{{See also|Vanguard LifeStrategy Fund tax distributions}}

Because the LifeStrategy Funds all have a significant allocation to taxable bonds, they are most suitable for investors holding their entire portfolios in tax-advantaged accounts. Investors having both taxable and tax-advantaged accounts are generally better served by splitting their equity and fixed income allocations, concentrating on tax-efficient asset location. Investors are well advised to consider the following tax considerations:
 
* Held in a tax-advantaged account, stocks will lose the special benefits they possess in a taxable account.<ref group="note"> Potential advantages for holding stocks in a taxable account include:

* Tax-deferred accounts convert long-term capital gains into ordinary income upon distribution; long-term capital gains have, at most times, been taxed at a lower rate than ordinary income.
* Qualified dividends are currently taxed at a lower rate.
* Long-term capital gains are only due when realized, which offers an additional means of deferring taxes.
* Ability to harvest losses.
* Ability to donate appreciated shares to charity, avoiding all taxes.
* Estate planning; there is a potential for stepped-up cost basis upon death.</ref>  

* In a taxable account the bond dividends will get taxed annually at ordinary income rates; when held in tax advantaged accounts this tax can be deferred.
* By holding a balanced fund in a taxable account the investor losses the option to [[Tax loss harvesting | harvest losses]] of individual asset classes.
* The fund has a history of changing asset allocation and targeted asset classes. Should a taxable investor disapprove of any future changes and wish to liquidate the investment, the capital gains tax, if applicable upon sale, might prove costly.

===Allocation choices===
Depending on an investor's personal preferences, the LifeStrategy Funds' asset allocations could be unsatisfactory. Some example reasons follow.
* Certain asset classes are not represented. For example, inflation-protected securities and commodities are entirely absent.
* The funds' asset class weightings do not suit all tastes. For investors seeking to match global asset allocations, 60% of equities are domestic, which is above the U.S. share by world market capitalization. The portfolios employ asset class funds that are market cap weighted, so the funds are not appropriate for investors desiring to [[Value Tilting - Stock | value "tilt"]] the  equity allocation of the U.S. stock holdings. For investors who wish to hold equity REITs in proportion to the weighting of commercial property in the economy, the funds' REITs allocations are represented only to the extent they appear in Total Stock Market Index.

==History==
Vanguard launched all four LifeStrategy Funds on 09/30/1994. Since then the fund has made numerous changes in asset class selections and portfolio allocations.

===Changes in 2011===
Vanguard announced a change in the funds' investment policy on 09/30/2011.<ref group="note"> From 1994-2011 the LifeStrategy funds asset allocations were implemented with these Vanguard fund portfolios:
*Vanguard Total Stock Market Index Fund
*Vanguard Total International Stock Index Fund
*Vanguard Asset Allocation Fund
*Vanguard Total Bond Market II Index Fund
*Vanguard Short-Term Investment Grade Bond Fund</ref> The funds adopted an all-index fund portfolio and implemented the change across several months following September 2011.<ref>[https://personal.vanguard.com/us/insights/article/fund-announcementB-09302011 LifeStrategy Funds to adopt all-index approach], September 30, 2011.</ref>
The portfolio allocation of the funds after the adoption of the all-index fund approach is shown in the following table:

{| class="wikitable collapsible collapsed" style=border="1" cellspacing="1" cellpadding="10" align="center"
|+ '''''LifeStrategy Funds Target Asset Mix'''''
! Holding !! style="background:#f0f0f0;" | Growth[[File:LifeStrategy Growth Fund.png|200px]] !! style="background:#f0f0f0;" | Moderate Growth[[File:LifeStrategy Moderate Growth Fund.png|200px]] !! style="background:#f0f0f0;" | Conservative Growth[[File:LifeStrategy Conservative Growth Fund.png|200px]] !! style="background:#f0f0f0;" | Income[[File:LifeStrategy Income Fund.png|200px]] 
|-
| style="background:#f0f0f0;" | US <br>Stocks ||align="center"|56% ||align="center"| 42% ||align="center"|28% ||align="center"|14%
|-
| style="background:#f0f0f0;" | International Stocks ||align="center"| 24% ||align="center"| 18% ||align="center"| 12% ||align="center"| 6%
|-
| style="background:#f0f0f0;" | US Bonds - Intermediate Term ||align="center"| 20% || align="center"|40% || align="center"|60% ||align="center"| 80%
|-
|}

===Changes in 2013===

On February 6, 2013, Vanguard announced the addition of a fourth asset class, [[Developed market bonds|international bonds]], to the LifeStrategy fund asset allocation matrix.<ref> [https://personal.vanguard.com/us/insights/article/fund-announcement-02062013 We're introducing Vanguard Total International Bond Index Fund] </ref>. The new asset allocation changes were completed on May 31, 2013.

The LifeStrategy funds had the following target asset mix, implemented with these Vanguard fund portfolios: 
*Vanguard Total Stock Market Index Fund
*Vanguard Total International Stock Index Fund
*Vanguard Total Bond Market II Index Fund
*Vanguard Total International Bond Index Fund
{| class="wikitable collapsible collapsed" style=border="1" cellspacing="1" cellpadding="10" align="center"
|+ '''''LifeStrategy Funds Target Asset Mix'''''
! Holding !! style="background:#f0f0f0;" | Growth[[File:Chart 1(16).png|200px]] !! style="background:#f0f0f0;" | Moderate Growth [[File:Chart 2(1).png|200px]] !! style="background:#f0f0f0;" | Conservative Growth [[File:Chart 3(1).png|200px]] !! style="background:#f0f0f0;" | Income[[File:Chart 4(1).png|220px]] 
|-
| style="background:#f0f0f0;" | US <br>Stocks ||align="center"|56% ||align="center"| 42% ||align="center"|28% ||align="center"|14%
|-
| style="background:#f0f0f0;" | International Stocks ||align="center"| 24% ||align="center"| 18% ||align="center"| 12% ||align="center"| 6%
|-
| style="background:#f0f0f0;" | US Bonds - Intermediate Term ||align="center"| 16% || align="center"|32% || align="center"|48% ||align="center"| 64%
|-
| style="background:#f0f0f0;" | International Bonds - Intermediate Term ||align="center"| 4% || align="center"|8% || align="center"|12% ||align="center"| 16%
|-
|}

===Changes in 2015===

See the [[#Fund allocations|Fund allocations section]].

==Notes==
<references group="note"/>

==See also==
*[[Balanced fund]]
*[[Fund of funds]]
*[[Vanguard statistical data spreadsheets]] for individual fund statistical data.

==References==
{{Reflist}}

==External links==
* [http://www.bogleheads.org/forum/viewtopic.php?f=1&t=140259 LifeStrategy "Ladder"] thread in Bogleheads.org forum, showing how to create a glide path from LifeStrategy Growth to LifeStrategy Income, in 5% shifts in asset allocation. 31 May 2014.

{{Balanced funds}}
[[Category:Balanced funds]]
[[Category:Vanguard]]