LifeStrategy 60/40
Vanguard LifeStrategy Moderate Growth (60/40)
Where it stands today
Our calculation, 1926-07 – 2026-09
Growth of $10,000
Where it came from
The Moderate Growth fund (now LifeStrategy 60/40; ticker VSMGX) is the classic 60/40 balanced mix in the Vanguard series: objective capital appreciation with a low to moderate level of current income.
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 Stock Market Index Fund (US stocks) | 36% | Target since 1 July 2015 |
| Total Bond Market II Index Fund (US bonds) | 28% | |
| Total International Stock Index Fund | 24% | was 18 % before 2015 |
| Total International Bond Index / Index II Fund (hedged) | 12% | was 8 % from 2013, 0 % before |
How we model it
| US bond market (aggregate) | 40% |
| US large companies (S&P 500) | 33% |
| Developed markets outside the US | 18% |
| Emerging markets | 6% |
| US small companies | 3% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US bond market (aggregate) (closest match) | 40% | 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) | 33% | 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) | 18% | iShares Core MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 |
| Emerging markets | 6% | iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) IE00BKM4GZ66 |
| US small companies | 3% | 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 60/40 portfolio built from broad index funds: the standard compromise between growth and stability, held at a fixed ratio rather than shifting with age.
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): 35 % Total Stock Market, 30 % Total Bond Market, 25 % Asset Allocation Fund, 10 % Total International Stock.
- Era B (late 2011 - April 2013): 42 % US stocks, 18 % international stocks, 40 % Total Bond Market (benchmark: 42 MSCI US Broad / 40 Aggregate / 18 ACWI ex USA IMI until 2 June 2013).
- Era C (May 2013 - June 2015): 42 / 18 / 32 US bonds / 8 international bonds.
- Era D (since 1 July 2015): 36 / 24 / 28 / 12.
- Earlier benchmark (until 15 Dec 2010): 50 % US stocks, 40 % Aggregate, 10 % MSCI EAFE.
Criticism
- Same tax-efficiency points as the whole series: less tax-loss harvesting, taxable (not municipal) bonds and no asset location choice in a taxable account (Oblivious Investor, 2011).
- Until 2011 about a quarter of the fund sat in the Asset Allocation Fund, which made the true stock/bond split unpredictable (Oblivious Investor).
- Fixed ratio: it does not de-risk with age, unlike target-date funds (Bogleheads comparison).
- In 2022 the fund fell 16.00 %, showing that a 60/40 mix with duration offered little cushion when rates and stocks both moved against it.
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Roaring Twenties boom | 1926-07 – 1929-08 | +85.9 % | +21.6 % | −3.6 % | +153.7 % |
| Wall Street crash and Great Contraction | 1929-09 – 1932-07 | −55.4 % | −24.2 % | −61.7 % | −78.2 % |
| New Deal recovery | 1932-08 – 1937-02 | +153.0 % | +22.5 % | −17.8 % | +268.7 % |
| Recession within the Depression | 1937-03 – 1938-03 | −30.9 % | −28.9 % | −30.9 % | −49.5 % |
| Rearmament and World War II | 1938-04 – 1945-09 | +120.9 % | +11.1 % | −16.8 % | +205.8 % |
| Postwar expansion | 1945-10 – 1965-12 | +514.1 % | +9.4 % | −15.4 % | +1212.9 % |
| Golden age of the 1950s | 1950-01 – 1959-12 | +205.2 % | +11.8 % | −8.9 % | +438.8 % |
| Go-go years and nifty-fifty | 1966-01 – 1968-12 | +25.2 % | +7.8 % | −10.0 % | +34.0 % |
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +103.5 % | +5.4 % | −29.1 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | −24.1 % | −12.9 % | −29.1 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +47.7 % | +11.2 % | −10.5 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +1025.3 % | +14.9 % | −19.6 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −13.7 % | — | −19.6 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +5.0 % | — | −11.2 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.4 % | — | −5.2 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +9.6 % | +7.1 % | −9.6 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −15.5 % | −6.1 % | −20.1 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +91.4 % | +14.1 % | −3.3 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −26.4 % | −18.5 % | −32.0 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +183.4 % | +10.2 % | −10.6 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −7.9 % | — | −7.9 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +26.3 % | +12.9 % | −12.1 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −16.1 % | −16.1 % | −21.0 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (1192) | −42.5 % | −6.2 % | +10.1 % | +23.3 % | +83.8 % |
| 3 y (1168) | −25.3 % | −0.1 % | +8.8 % | +15.7 % | +29.4 % |
| 5 y (1144) | −9.2 % | +3.1 % | +8.4 % | +13.9 % | +24.5 % |
| 10 y (1084) | −0.2 % | +4.9 % | +8.3 % | +13.1 % | +16.3 % |
| 15 y (1024) | +2.3 % | +5.8 % | +8.3 % | +13.0 % | +15.2 % |
| 20 y (964) | +3.4 % | +6.4 % | +8.6 % | +12.3 % | +14.4 % |
| 30 y (844) | +6.4 % | +7.6 % | +9.0 % | +10.7 % | +11.9 % |
How it behaved in history
- 2000-2002 (dot-com bear market). Calendar returns -0.88 %, -4.48 %, -10.32 %; worst quarter -10.77 % in Q3 2002; 2003 rebounded +22.40 %. www.sec.gov
- 2008-2009 (financial crisis). Calendar returns not obtained from a primary source; see uncertain.
- 2022 (stocks and bonds fall together). -16.00 % for the year; its benchmark fell 15.45 %. workplace.vanguard.com
Published results (by others)
- Calendar-year returns of the Moderate Growth fund, 1998-2007 (1998-2007): 19.03, 12.01, -0.88, -4.48, -10.32, 22.40, 10.57, 5.69, 13.31, 7.36 % www.sec.gov
- Best and worst quarters (1998-2007): Best +13.08 % (Q4 1998); worst -10.77 % (Q3 2002) www.sec.gov
- Average annual returns to 31 Dec 2007 (to 2007-12-31): 1 year 7.36 %, 5 years 11.71 %, 10 years 7.01 % www.sec.gov
- Calendar-year returns 2016-2025 (2016-2025): 7.13, 15.04, -4.91, 19.37, 13.59, 10.08, -16.00, 15.49, 10.31, 16.24 % workplace.vanguard.com
- Average annual returns to 30 Sept 2026 (to 2026-09-30): 10 years 8.03 %, 5 years 6.61 % (benchmark 8.37 % and 6.90 %); $10,000 from end-2015 became $21,760 by end-2025 (benchmark $22,420) workplace.vanguard.com
- Fiscal-year total returns (years ending 31 October) (FY2010-FY2014): 2010 14.50 %, 2011 4.14 %, 2012 9.25 %, 2013 14.66 %, 2014 8.67 % www.sec.gov
What we could not verify
- Why Vanguard created the series in 1994 is not documented in the sources found.
- Calendar-year returns for 2008 and 2009 not found from a primary source.
- Dates of the 2011 and 2013 changes: see the Growth file; not found in prospectus text.
- Renaming date from Moderate Growth to 60/40 not found (the semi-annual report for the period ending April 2026 already uses the new name).
Sources
- workplace.vanguard.com
https://workplace.vanguard.com/iippdf/pdfs/FS914.pdf - www.sec.gov
https://www.sec.gov/Archives/edgar/data/0000736054/000093247108000728/starfunds485b022008.txt - 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 - www.sec.gov
https://www.sec.gov/Archives/edgar/data/0000736054/000110465926079669/tm2614557d3_ncsrs.htm
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.