60% of the underlying assets are trackers. In theory, the 40% bond allocation should rise in the event of a crash. That is the point of having the bonds, is it not?
The bond allocation is trackers too. They will go wherever their market goes. It may (hopefully) be a different direction to equities. It may not be.
If they could not go in the same direction as equities at the same time, how would you explain them going up substantially, in broadly the same direction as equities since 2009? Their natural income is 1-3%, yet they have been going up at several times that, for years... which is all stuff that can be reversed and go - painfully - back the other way.
Nobody is complaining that they are going up when equities are going up and boosting the return of the VLS60 product. But you can bet that they will be complaining if they go down at the same time as equities are going down and don't function as a 'brake' on the steep losses of equities. But if you only have Vanguard's bond index funds (which have been positively correlated with equities recently) as your non-equity holdings, it stands to reason you could easily expect to see the VLS products bottom of the performance tables in the down years just like they are now at the top in the good years.
That is assuming on an equity crash the bonds keep their value. Are my calculations correct?
Yes, but it is unlikely they will exactly keep their value. Depending on the reasons for the equity crash, they may gain value, or lose some.