Perspectives : Investment | October 23, 2024

Vanguard's active fixed income suite continues to evolve to meet investors' needs

October marks a significant milestone for Vanguard’s active fixed income lineup, as Vanguard Core-Plus Bond Fund and Vanguard Multi-Sector Income Bond Fund reach their three-year anniversaries. These funds further demonstrate Vanguard’s commitment to offering investors a diverse array of fixed income strategies. With interest rates expected to remain higher for longer and a record number of Americans reaching retirement age over the next several years, the need and demand for income has never been greater. So there is no better time to highlight Vanguard’s suite of fixed income products designed to meet those diverse and growing needs.      

Outperformance happens by design

Vanguard is an investment company owned by the people who invest in our funds. That means our investors are our owners,1 and we can take a different approach to active fixed income. 

Active fixed income assets under management2

$186 billion
Municipal bonds
$265 billion
Taxable bonds
$566 billion
Money market
$1,017 billion
Total active fixed income

Outperformance

95 %
of our active bond funds have delivered better risk-adjusted performance than their peer group averages3
Our investor-owned structure allows us to prioritize our investors’ returns, passing along the benefits that come with achieving economies of scale and utilizing a diversified set of reliable strategies that are both repeatable and scalable. We manage fixed income strategies within a differentiated risk framework strengthened by our low fees, which allows us to balance risk according to the opportunity set and market environment. As a result, we believe we can deliver more consistent performance over the long term and superior risk-adjusted returns relative to competitors. 
Vanguard's expanding fixed income offer and capabilities

The evolution of Vanguard’s active fixed income offer

The two recent achievements for our Core-Plus and Multi-Sector Income bond funds illustrate our continued efforts in a decade-long expansion of our active fixed income franchise with a focus on delivering bond strategies that are most relevant to investors. By providing diversified active exposure across Core, Core-Plus, and Multi-Sector Income, we’ve complemented a fixed income product suite that we’ve been cultivating since our inception over 40 years ago. 

Our history with active

While our roots in active fixed income date back to our inception, Vanguard has made a concerted effort over the past decade to expand our active fixed income capabilities. We’ve attracted talent from within the walls of Vanguard, but also throughout the industry, to help enhance our capabilities and ultimately deliver the exceptional results we are proud of today.

In 2016, we launched Vanguard Core Bond Fund for investors who want actively managed U.S. aggregate bond exposure. At that same time, we began to build out our emerging-market and high-yield prowess.

Then in 2017, we introduced Vanguard Emerging Markets Bond Fund and began employing those high-yield capabilities across many of our U.S.-credit-dominated portfolios. We followed that with the launch of Vanguard Global Credit Bond Fund in 2018 to help investors benefit from exposure to global bonds. Our success in these areas gave us the ability and conviction to launch Vanguard Core-Plus Bond Fund and Vanguard Multi-Sector Income Bond Fund in 2021.

Today, while our Core Bond and Core-Plus Bond Funds serve as centerpieces of a fixed income portfolio depending on risk preference, Vanguard Multi-Sector Income Bond Fund is designed to be a total-return enhancer with a focus on higher income.  And for investors who want to be more hands-on, our standalone emerging markets and high-yield products give them the option to actively decide on allocations to those sectors.

Our full suite of active fixed income products now gives investors access and a choice to pursue income in an ever-changing fixed income landscape, offering expert active management and true-to-label exposure at attractive price points. 

Built for success

Our active fixed income team is a global organization with exceptional talent and localized expertise. Together, they have over 40 years of active fixed income management experience, with over 130 dedicated team members.

Our investment philosophy prioritizes deep sector expertise and a collaborative culture within our active fixed income teams to promote the goal of long-run outperformance. The collaborative approach helps reduce sector biases to optimize portfolio exposures, and our commitment to transparency means investors can clearly identify key drivers of risk and return. Teams seek a diverse set of repeatable and scalable strategies to outperform the market, rather than relying on concentrated risk positions, and aim to deploy risk efficiently over a market cycle to capture upside opportunities while mitigating large downside risks. This method has allowed us to deliver consistent performance over the long term and superior risk-adjusted returns relative to competitors.3

1 Vanguard is owned by its funds, which are owned by Vanguard’s fund shareholder clients.

2 Vanguard, as of June 30, 2024.

3 For the ten-year period ended September 30, 2024, 42 of 44 Vanguard active bond funds and 6 of 6 Vanguard money market funds outperformed their peer group averages; results will vary for other time periods. Only funds with a minimum 10-year history were included in the comparison. (Source: LSEG Lipper.) Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.

Notes:

  • Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF are not to be confused with the similarly named Vanguard Core Bond Fund and Vanguard Core-Plus Bond Fund. These products are independent of one another. Differences in scale, certain investment processes, and underlying holdings between the ETFs and their mutual fund counterparts are expected to produce different investment returns by the products.
  • For more information about Vanguard funds or Vanguard ETFs®, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
  • Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
  • All investing is subject to risk including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Past performance is no guarantee of future results.
  • Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments.
  • Investments in bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.
  • High-yield bonds generally have medium- and lower-range credit-quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit-quality ratings.