Vanguard Life-Cycle Investing Model: A framework for building target-date portfolios

Author(s): Roger Aliaga-Díaz, Ph.D; Harshdeep Ahluwalia, M.Sc.; Kevin DiCiurcio, CFA; Matthew C. Brancato, CFA, CPA; Scott Donaldson, CFA, CFP; David Pakula, CFA
Published: November 01. 2016

Interest in tailored target-date fund solutions continues to grow. New tools from Vanguard can help plan sponsors determine if their plan participants could benefit from a glide path designed for their unique participant populations.

In Vanguard Life-Cycle Investing Model: A framework for building target-date portfolios, authors Roger Aliaga-Díaz, Harshdeep Ahluwalia, Kevin DiCiurcio, Matthew Brancato, Scott Donaldson, and David Pakula explain the inner workings of Vanguard's proprietary model for glide path construction. The VLCM enables cost-benefit analysis of glide path customization, evaluation of risk-return trade-offs, and portfolio performance simulation under different market scenarios. The paper also shares general findings on which participant populations could see the greatest benefit from glide path customization.

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