7.1 in Short-Term Bond
U.S. News evaluated 111 Short-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
| Scorecard | |
|---|---|
| Morningstar | 4 / 5 Stars |
| Lipper | 5 5 5 5 1 |
| Zacks Investment Research | 4 (Sell) |
| Standard & Poor's | 5 / 5 Stars |
| TheStreet.com | C (Hold) |
Fund Overview
The Vanguard Short-Term Investment-Grade fund aims to give investors a fairly safe place to park their money. Short-term bond funds generally have less volatility than their longer-term counterparts.
As of April 04, 2012, the fund has assets totaling $38.25 billion. Its portfolio consists of primarily U.S. corporate and asset-backed bonds.
This fund’s asset-backed and commercial mortgage-backed sector bonds suffered tremendously during the credit crisis. As the market recovered, the fund rebounded, thanks in part to government intervention in the mortgage and insurance sectors. Some of the fund’s highest returns of the past decade came in 2009, boosted by rebounds in both corporate bonds and asset-backed securities. The fund has returned 2.89 percent over the past year and 6.78 percent over the past three years.
Over time, the fund has had fairly consistent performance. The fund leans toward corporate bonds with higher yields, and it holds fewer treasuries than many peers. “Management’s protective stance means we wouldn’t expect it to take on inordinate credit or interest-rate risk,” Morningstar says. The fund has returned 4.28 percent over the past five years and 4.14 percent over the past decade.
| Trailing Returns | Updated 03.31.2012 |
|---|---|
| Year to date | 1.6% |
| 1 Year | 2.9% |
| 3 Years (Annualized) | 6.8% |
| 5 Years (Annualized) | 4.3% |
| 10 Years (Annualized) | 4.1% |
Investment Strategy
“The fund invests in a variety of high-quality and, to a lesser-extent, medium-quality fixed income securities, at least 80 percent of which will be short-term and intermediate-term investment-grade securities.”
Role in Portfolio
Morningstar calls the fund a “supporting player” and says, “This fund should suit investors with a one- to three-year horizon, yet it is not immune to the risks of the corporate-bond, asset-backed, and mortgage-backed sectors.”
Fund Opinion
The fund appears on the 2011 “Kiplinger 25” list of the best no-load mutual funds.
Kiplinger 25 2011-04-13
In the 2009 Award Winners edition of The Independent Adviser for Vanguard Investors, Dan Wiener says, "Of critical importance from a portfolio diversification/safety standpoint is that this fund seldom loses money."
2010-01-26
The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.
Value Line 2012-03-09
Management
Veteran Bob Auwaerter has managed the day-to-day activities of the fund since 1983—a year after the fund’s inception. In early 2008, he was joined by Gregory Nassour, who is now comanager. Morningstar says, “Unlike most other fund companies, whose funds are technically owned by shareholders but are practically controlled by management companies, Vanguard investors own the funds, which own the management company.”
Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “This isn’t Jack Bogle’s Vanguard, but it’s still a fine steward of shareholders’ wealth. The family’s mutual ownership structure helps it offer low fees and keep investor interests paramount.”
Morningstar 2010-02-17
In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.
2010-02-17
Performance
The fund has returned 2.89 percent over the past year, 6.78 percent over the past three years, 4.28 percent over the past five years, and 4.14 percent over the past decade.
Hypothetical Growth of $10,000
Updated 03.31.2012
In the 2009 Award Winners edition of The Independent Adviser for Vanguard Investors, Dan Wiener says, "Of critical importance from a portfolio diversification/safety standpoint is that this fund seldom loses money."
2010-01-26
The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 4 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.
Value Line 2012-03-09
Holdings
“The main goal of the portfolio is to be a very broadly diversified portfolio of high quality with a short duration,” says Nassour. “Our portfolio neighborhood is in the one- to five-year maturity range overall.”
Asset Allocation
| % Long | % Net | |
|---|---|---|
| Cash | 11.96 | 11.96 |
| Stocks | 0.0 | 0.0 |
| Bonds | 67.74 | 67.74 |
| Other | 0.23 | 0.23 |
| Foreign Bonds | 19.92 | 19.92 |
| Foreign Stocks | 0.0 | 0.0 |
| Convertible | 0.0 | 0.0 |
| Preferred | 0.16 | 0.16 |
Updated 12.31.2011
Top Holdings
Performance as of 03.31.2012
Portfolio as of 12.31.2011
| % Net Assets | |
|---|---|
| CMT Market Liquidity Rate | 1.26 |
| US Treasury Note 1.375% | 1.08 |
| US Treasury Note 0.5% | 0.96 |
| General Elec 5% | 0.72 |
| Cap One Cc Tr 2007-2a 5.4% | 0.7 |
Fees
Vanguard Short Term Investment Grade Fund has an expense ratio of 0.20 percent.
Risk
According to Vanguard, “Although bonds are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates.”
The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.
Value Line 2012-03-09
