Vanguard Intermediate-Term Investment Grade Fund

3 / 5 Stars
5 5 3 5 1
Zacks Investment Research
2 (Buy)
Standard & Poor's
5 / 5 Stars
C+ (Hold)

#7 in Corporate Bond

U.S. News evaluated 49 Corporate Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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The fund has returned 6.23 percent over the past year, 5.40 percent over the past three years, 7.82 percent over the past five years, and 5.76 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 4.5%
1 Year 6.2%
3 Years (Annualized) 5.4%
5 Years (Annualized) 7.8%
10 Years (Annualized) 5.8%

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Vanguard Intermediate-Term Investment-Grade is a bond fund with a flair for corporate debt.

As of July 03, 2014, the fund has assets totaling $17.55 billion. Its portfolio consists primarily of corporate bonds with a dollar-weighted average maturity of between five and 10 years. 

Recently, this fund has been for a ride on the corporate bond roller coaster. In 2008, exposure to companies like Lehman Brothers and Wachovia harmed returns. Meanwhile, the fund partly missed out on the treasuries rally because of its relatively small positions in the sector. But the fund's returns started to turn around in 2009 as corporate bonds rebounded. During this stretch, the fund had an edge over some of its competitors that are more heavily weighted in safer government debt. Generally, the fund avoids the worst of the market's swings thanks to its diversification. Says Morningstar: "By keeping virtually all of its individual holdings under 1 percent of assets, management reduces the impact of ugly surprises." The fund has returned 6.23 percent over the past year and 5.40 percent over the past three years.

The fund has a long track record of solid returns. Until 2004, the fund was called Intermediate-Term Corporate fund. The name change reflected a shift in the portfolio to include some government bonds and mortgage-backed securities. Still, the fund's character has stayed relatively constant despite those additional portfolio options. The fund has returned 7.82 percent over the past five years and 5.76 percent over the past decade.

Investment Strategy

The fund focuses on corporate bonds while looking to other types of holdings, such as asset-backed securities, to round out its portfolio. Most of its corporate bonds are domestic, although it also diversifies by investing internationally in corporates.

Role in Portfolio

Morningstar calls it a "supporting player."


Longtime Manager Robert Auwaerter left the fund in May 2010. Co-manager Gregory S. Nassour took over management but has been in the position since 2008.


Vanguard Intermediate-Term Investment Grade Fund has an expense ratio of 0.20 percent.

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The fund is subject to the risks of the corporate bond market.

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