Investment Strategy - Vanguard is implementing a 40/60 asset allocation strategy, deviating from the traditional 60/40 approach [1] - The 40/60 strategy involves underweighting equities due to expectations of lower returns driven by higher valuations in the equity market over the next decade [2] - Time-varying asset allocation strategies are updated quarterly and aim to achieve a better risk-return trade-off by managing market opportunities and risks [3][4] Portfolio Composition - Vanguard's time-varying asset allocation is tilted towards value stocks over growth stocks, developed markets over emerging markets, and longer duration government bonds over corporate bonds [5] - The strategy anticipates that rates will likely decline, at least in the shorter term, over the coming years [5] Risk Management - The 40/60 strategy aims to reduce risk and volatility compared to the classic 60/40 portfolio [6][7] - Recent updates show similar returns between the 60/40 and 40/60 strategies, but the 40/60 offers more favorable annualized volatility and drawdown potential [7]