Benchmarking managed payout funds

In the Vanguard Managed Payout Funds 2008 semiannual report the firm made the following comments regarding benchmarking the Managed Payout Funds:

The Managed Payout Funds seek to make monthly cash distributions while providing different levels of long-term inflation protection and capital appreciation.

Over time, a sensible benchmarking approach will include multiple measures, such as a fund’s performance relative to:


 * An inflation-based or absolute-return target, consistent with the fund’s goal of providing long-term inflation protection or a particular nominal payout rate.


 * A so-called policy portfolio (that is, a long-term strategic asset allocation) that, in the board of trustees’ judgment, is consistent with the fund’s objective. A fund’s performance relative to a policy portfolio can highlight the effectiveness of any decisions to deviate from the benchmark.
 * A peer group of funds with similar objectives (if an appropriate one exists).

Managed fund payouts
Vanguard reports the history of fund income payouts, as indicated in the tables below. Inflation, as measured by the CPI-U is also provided.

Policy portfolio
Vanguard benchmarks each Managed Payout Fund to the following policy benchmarks: