Vanguard CRSP – Moderate

A strategy for investors seeking a balance of income and growth from a strategic allocation of ETFs across a broad spectrum of asset classes.  

Strategy Description

The initial portfolio is built using the Vanguard’s CRSP series of ETFs distinguished by their tracking of broad market domestic stock indexes from the University of Chicago’s Center for Research in Security Price (CRSP).   

The Moderate strategy allocates 50% to short, intermediate, long-term, mortgaged-backed, and international fixed income securities.  The remaining 50% is allocated among domestic growth, value, and small-cap equities as well as FTSE Developed Markets and FTSE Emerging Markets.   

From there, the strategy tracks each ETF using two separate algorithms, each independent of the other.  Rules are set so that any ETF may be moved to cash or short term bonds should certain criteria be met.

For investors, this provides the benefit of having a known strategic allocation with the comfort of knowing that every ETF is independently protected with our Dynamic Downside Risk Protector®  It’s like investing with a safety net.   

Definitions

Sharpe Ratio – the average return earned in excess of the risk-free rate.  A higher Sharpe Ration is better

Risk-Free Rate – represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

Sortino Ratio – another measure of risk that takes into account the downside deviation of the asset.  A higher Sortino Ratio is better.

What is Drawdown?

Drawdown is the measure from the highest high to the lowest low or peak to trough during a specific time period.  It is an important measurement of risk.  A larger drawdown requires a more significant increase in the security to recover.

Volatility measures the change in the price of an investment.  The higher the volatility, the higher the difference between the high and the low of an investment’s price.

The 12 Month Rolling ROR is the compound rate of return for the last 12 months.  The rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.

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