LifeStrategy 40/60
Vanguard LifeStrategy Conservative Growth (40/60)
Where it stands today
Our calculation, 1926-07 – 2026-09
Growth of $10,000
Where it came from
The Conservative Growth fund (now LifeStrategy 40/60; ticker VSCGX) is the bond-heavy member of the series: objective current income and low to moderate capital appreciation, with about 59 % bonds and 41 % stocks per the current fact sheet. The later 20/80 Income fund is the most conservative of the series; it is not modelled here.
The Vanguard LifeStrategy funds were launched on 30 September 1994 as a set of four ready-made balanced portfolios (Income, Conservative Growth, Moderate Growth and Growth), each a fund of funds that holds other Vanguard funds in fixed target proportions. The fund documents give 30 September 1994 as the inception date for all of them, and SEC filings place them in the Vanguard STAR Funds trust. I did not find a Vanguard statement explaining why the series was created in 1994 or who designed it; the motive below is therefore described only from what the documents show, not from a stated rationale.
For the first seventeen years the portfolios were not pure index mixes. The 2008 prospectus lists, for each of the three funds, a 25 % slot in the Vanguard Asset Allocation Fund, an actively tilted fund that could move between stocks, bonds and cash. Because of that slot the real stock/bond split of a LifeStrategy fund could differ from its label and could not be predicted exactly. In early October 2011 Vanguard announced that the Asset Allocation Fund would be removed and expense ratios lowered; the funds became static mixes of index funds, with the stock part split roughly 70 % US / 30 % international and the bond part held in the Total Bond Market index fund.
Two later changes widened the international share. In 2013 the boards approved moving part of each fund's bond exposure from US bonds into the currency-hedged Total International Bond Index Fund (a supplement shows Growth moving from 20 % US bonds to 16 % US plus 4 % international, i.e. a fifth of the bond sleeve); the semi-annual report says this was added in May 2013. In 2015 the boards raised the international share of the stock sleeve from 30 % to 40 % and the international share of the bond sleeve from 20 % to 30 %, with the total stock/bond split unchanged; the fund benchmarks switched to the new weights on 1 July 2015.
The funds were later renamed after their stock/bond split. By the 2026 documents the Growth fund is called LifeStrategy 80/20, Moderate Growth is 60/40 and Conservative Growth is 40/60 (the exact renaming date was not found). The 2026 fact sheets list the three funds with expense ratios of 0.10 % and total net assets of about 26.8, 24.1 and 11.0 billion dollars for 80/20, 60/40 and 40/60 respectively.
What is in it
| Total Bond Market II Index Fund (US bonds) | 41.5% | Fund-level targets in the fact sheet: US fixed income 41.5 % |
| Total Stock Market Index Fund (US stocks) | 25% | |
| Total International Bond Index / Index II Fund (hedged) | 17.5% | |
| Total International Stock Index Fund | 16% |
How we model it
| US bond market (aggregate) | 59% |
| US large companies (S&P 500) | 22.5% |
| Developed markets outside the US | 12% |
| Emerging markets | 4% |
| US small companies | 2.5% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US bond market (aggregate) (closest match) | 59% | iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) IE00BDBRDM35iShares Core Global Aggregate Bond UCITS ETF USD (Dist) IE00B3F81409 |
| US large companies (S&P 500) | 22.5% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
| Developed markets outside the US (closest match) | 12% | iShares Core MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 |
| Emerging markets | 4% | iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) IE00BKM4GZ66 |
| US small companies | 2.5% | SPDR Russell 2000 U.S. Small Cap UCITS ETF IE00BJ38QD84iShares MSCI USA Small Cap ESG Enhanced CTB UCITS ETF USD (Acc) IE00B3VWM098 |
The idea
A single-fund conservative mix that puts most of the money in bonds, with a stock slice to keep up with inflation; intended for investors who prefer income and lower swings.
How people buy it
The fund itself (US mutual fund, Investor Shares; Vanguard fact sheet September 2026 gives expense ratio 0.10 %, which is the weighted cost of the underlying index funds). It holds Vanguard Total Stock Market Index, Total International Stock Index, Total Bond Market II Index and the (currency-hedged) Total International Bond Index funds. Do-it-yourself replication with the same four index funds or ETFs is possible. Non-US analogues exist under the same brand (UK LifeStrategy equity-percentage funds), but they have different compositions and are not modelled here.
Rebalancing as published
The fund rebalances automatically: it is a fixed-formula fund of funds that keeps the underlying funds at the target percentages; the fact sheet describes the allocation as a fixed formula (the exact trading frequency is not stated in the documents I read; a third-party profile mentions quarterly rebalancing, not verified in a Vanguard document).
Variants
- Era A (1994-2011, 2008 prospectus): 30 % Total Bond Market, 25 % Asset Allocation Fund, 20 % Short-Term Investment-Grade, 20 % Total Stock Market, 5 % Total International Stock.
- Benchmark history from the fact sheet footnote (the index composite, which shows how the intended mix moved): until 31 Aug 2003 40 % Aggregate / 35 % Dow Jones US total stock / 20 % 3-month T-bill / 5 % MSCI EAFE; from Sept 2003 the T-bill part was replaced by a 1-3 year credit index (20 %); until 30 Nov 2011: 40 % Aggregate, 28 % US stock, 20 % 1-3 year credit, 12 % ACWI ex USA IMI (the 2010 version had 35/5 US/EAFE stock); from Dec 2011 to 2 June 2013: 60 % Aggregate, 28 % US stock, 12 % ex-US stock; to 30 June 2015: 48 % US Aggregate, 28 % US stock, 12 % ex-US bonds, 12 % ex-US stock; since 1 July 2015: 42 / 24 / 18 / 16.
- In 2011-2013 the fund (per the Oblivious Investor article and the 2013 supplement) held 60 % Total Bond Market and 40 % stocks (28 % US, 12 % international); in May 2013 12 % of the portfolio moved to hedged international bonds (48 % US + 12 % international).
Criticism
- Same tax-efficiency points as the whole series (Oblivious Investor, 2011).
- A large part of the bond sleeve is now currency-hedged foreign bonds (17.5 % of the fund) and hedging cost can weigh on yield; this is our observation, not a published criticism.
- 2022 showed the limit of a bond-heavy mix: -14.99 % in a year when inflation lifted rates.
- Naming is looser than the label suggests: the fund's own targets are about 41 % stocks and 59 % bonds.
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Roaring Twenties boom | 1926-07 – 1929-08 | +59.6 % | +15.9 % | −2.3 % | +153.7 % |
| Wall Street crash and Great Contraction | 1929-09 – 1932-07 | −39.6 % | −15.9 % | −45.4 % | −78.2 % |
| New Deal recovery | 1932-08 – 1937-02 | +105.1 % | +17.0 % | −11.7 % | +268.7 % |
| Recession within the Depression | 1937-03 – 1938-03 | −20.7 % | −19.3 % | −20.8 % | −49.5 % |
| Rearmament and World War II | 1938-04 – 1945-09 | +85.0 % | +8.5 % | −11.2 % | +205.8 % |
| Postwar expansion | 1945-10 – 1965-12 | +311.0 % | +7.2 % | −10.5 % | +1212.9 % |
| Golden age of the 1950s | 1950-01 – 1959-12 | +126.6 % | +8.5 % | −6.6 % | +438.8 % |
| Go-go years and nifty-fifty | 1966-01 – 1968-12 | +19.0 % | +6.0 % | −7.7 % | +34.0 % |
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +105.0 % | +5.4 % | −20.0 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | −14.7 % | −7.7 % | −20.0 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +40.7 % | +9.8 % | −10.0 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +833.9 % | +13.7 % | −13.7 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −9.1 % | — | −13.7 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +6.4 % | — | −7.8 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.6 % | — | −5.1 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +11.1 % | +8.2 % | −5.8 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −3.1 % | −1.2 % | −7.6 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +66.5 % | +10.9 % | −2.8 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −15.8 % | −10.8 % | −20.7 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +134.8 % | +8.3 % | −5.9 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −5.1 % | — | −5.1 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +18.9 % | +9.4 % | −7.9 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −15.1 % | −15.1 % | −18.9 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (1192) | −29.4 % | −3.5 % | +8.1 % | +18.7 % | +55.7 % |
| 3 y (1168) | −16.5 % | +0.9 % | +7.4 % | +13.4 % | +25.7 % |
| 5 y (1144) | −4.9 % | +3.5 % | +6.8 % | +12.0 % | +22.9 % |
| 10 y (1084) | +1.6 % | +4.8 % | +7.0 % | +12.3 % | +16.1 % |
| 15 y (1024) | +3.0 % | +5.3 % | +7.2 % | +12.3 % | +14.2 % |
| 20 y (964) | +3.6 % | +5.7 % | +7.4 % | +11.6 % | +13.4 % |
| 30 y (844) | +5.4 % | +6.3 % | +7.7 % | +10.3 % | +11.1 % |
How it behaved in history
- 2000-2002 (dot-com bear market). Calendar returns +3.12 % (2000), -0.08 % (2001), -5.37 % (2002); worst quarter -6.74 % in Q3 2002; +16.57 % in 2003. www.sec.gov
- 2008-2009 (financial crisis). Calendar returns not obtained from a primary source; see uncertain.
- Covid shock, Q1 2020. Worst quarter of the 2008-2021 window: -8.00 % in Q1 2020, followed by the best quarter, +9.68 %, in Q2 2020. sec.gov
- 2022 (stocks and bonds fall together). -14.99 % for the year (benchmark -14.50 %), the first double-digit loss in the 2016-2025 table. workplace.vanguard.com
Published results (by others)
- Calendar-year returns of the Conservative Growth fund, 1998-2007 (1998-2007): 15.88, 7.86, 3.12, -0.08, -5.37, 16.57, 8.02, 4.45, 10.62, 6.99 % www.sec.gov
- Best and worst quarters in that prospectus (1998-2007): Best +9.02 % (Q2 2003); worst -6.74 % (Q3 2002) www.sec.gov
- Average annual returns to 31 Dec 2007 (to 2007-12-31): 1 year 6.99 %, 5 years 9.26 %, 10 years 6.61 % www.sec.gov
- Best and worst quarters in the later prospectus (2008-2021) (2008-2021): Best +9.68 % (Q2 2020); worst -8.00 % (Q1 2020); 10-year average to end-2021 7.09 % sec.gov
- Calendar-year returns 2016-2025 (2016-2025): 5.96, 10.92, -2.95, 15.68, 11.51, 6.05, -14.99, 12.48, 7.54, 12.86 % workplace.vanguard.com
- Average annual returns to 30 Sept 2026 (to 2026-09-30): 10 years 5.78 %, 5 years 4.28 % (benchmark 6.05 % and 4.51 %); $10,000 from end-2015 became $18,107 by end-2025 (benchmark $18,561) workplace.vanguard.com
- Fiscal-year total returns (years ending 31 October) (FY2010-FY2014): 2010 12.30 %, 2011 3.74 %, 2012 7.88 %, 2013 9.18 %, 2014 7.34 % www.sec.gov
What we could not verify
- Why Vanguard created the series in 1994 is not documented in the sources found.
- 2008-2009 calendar returns not found from a primary source.
- The 2003 and 2011 benchmark changes are from the fact-sheet footnote; the footnote describes the benchmark composite, and the fund's own holdings may have differed (the fund held an Asset Allocation Fund slot until 2011).
- The 2011-2013 fund weights (60 % Total Bond Market, 28 % US stock, 12 % international stock) are inferred from the benchmark composite and the 2011 article, not from a prospectus.
- Renaming date to 40/60 not found.
Sources
- workplace.vanguard.com
https://workplace.vanguard.com/assets/corp/fund_communications/pdf_publish/us-products/fact-sheet/F0724.pdf - www.sec.gov
https://www.sec.gov/Archives/edgar/data/0000736054/000093247108000728/starfunds485b022008.txt - sec.gov
https://sec.gov/Archives/edgar/data/736054/000168386322001084/f11037d1.htm - www.sec.gov
https://www.sec.gov/Archives/edgar/data/0000736054/000093247113002115/lsmptbmiitotibfinal.htm - www.sec.gov
https://www.sec.gov/Archives/edgar/data/0000736054/000093247113006989/starfunds_final.htm - www.sec.gov
https://www.sec.gov/Archives/edgar/data/736054/000093247115006551/starfunds_final.htm - obliviousinvestor.com
https://obliviousinvestor.com/vanguard-lifestrategy-funds/ - www.bogleheads.org
https://www.bogleheads.org/wiki/Vanguard_LifeStrategy_funds
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.