Rather than toil over the construction of an ideal fixed income portfolio for a client, advisors can simply apply a template primed for success using Vanguard’s model portfolios. On that note, Vanguard just introduced two new dynamic asset allocation fixed income model portfolios that can suit various investor profiles.
The introduction comes after the release of the Fixed Income Risk Diversification and Fixed Income Total Return models and the Fixed Income Capital Preservation and Fixed Income Active Total Return models earlier this year. The latest additions to the portfolio are as follows:
- Vanguard Fixed Income – Risk Diversification Tax-Aware Model. As the end of 2025 draws closer, it’s an ideal time to start thinking about tax strategies for the new year. This portfolio is suitable for those seeking risk diversification along with an emphasis on after-tax returns. When the equities market experiences a drawdown, this model presents an ideal ballast with the requisite fixed income exposure. The model focuses on high-quality credit as well as municipal bonds. Meanwhile it adjusts allocations on a semi-annual basis, in order to reflect the shifting forecasts of the Vanguard Capital Markets Model (VCMM).
- Vanguard Fixed Income – Income Focused Model. As interest rates and subsequently yields star to decline, investors are seeking alternate ways to extract more income. As such, this model portfolio is ideal for investors seeking an elevated level of income. The model portfolio includes increased exposure to credit, emerging markets, and below investment grade bonds. This maximizes yield opportunities beyond the broad U.S. fixed income market. The model adds exposure to global investment-grade and high-yield bonds. Meanwhile, it also changes its allocations on a quarterly basis according to the VCMM forecasts.
“Fixed income continues to be a key component in helping investors achieve stability, generate income, and diversify their portfolios,” said Amma Boateng, managing director of financial advisor services at Vanguard. “Our two new fixed income model portfolios are designed to address a variety of client needs, from income generation to tax management, while maintaining the disciplined and low-cost investment approach that defines Vanguard.”
Leveraging Vanguard's Fixed Income Group
These model portfolios leverage the expertise and market experience of the vaunted Vanguard Fixed Income Group. Bond markets carry a high degree of complexity and nuances. These are privy to certain certain sub-sectors as well as international bond markets. The experts at Vanguard can deftly navigate the bond market. In doing so, they can provide efficient and cost-effective ways for advisors to build portfolios using these models.
Click here to learn more about Vanguard’s fixed income model portfolios.
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