Consider: Not every head coach calls every play or decides which players are on the field. Coordinators or specific coaches may make those decisions. In a similar fashion, you may decide to delegate some investment decisions to an experienced active asset manager.
That’s where the active Vanguard Multi-Sector Income Bond Fund, ticker VMSAX, can play a role.
Sometimes you want more out of bonds: more income, more return. That’s especially true for investors seeking income for retirement.
VMSAX is designed to offer significant allocations in asset classes that historically offer higher yields than U.S. Treasuries and government debt:
- Investment-grade corporates.
- High-yield bonds.
- Emerging markets bonds.
- Asset-backed securities.
Unlocking value: VMSAX is also built on the powerful premise that active management across multiple credit sectors can unlock value and income opportunities.
Approximate sector exposures
This design gives the portfolio management team the flexibility to rotate among credit sectors and select securities based on credit fundamentals, relative value, and macroeconomic trends—in the same way an offensive coordinator changes plays or a defensive coordinator changes coverages as the situation warrants. Vanguard’s investments process, which combines top-down macroeconomic views with bottom-up sector and securities analysis, is infused into this strategy.
More capabilities: Vanguard’s Multi-Sector Income strategy now includes structured products, which include asset-backed securities, commercial mortgage-backed securities, and residential mortgage-backed securities.
The structured products team, which includes eight professionals with an average of 20 years of experience, manages $17 billion across Vanguard’s portfolios as of March 31, 2025.
Beyond the Agg: Many fixed income funds are benchmarked to the Bloomberg US Aggregate Index (commonly known as the Agg), a broad index dominated by U.S. Treasuries and government issues. VMSAX is designed to go beyond the Agg, especially in the high-yield and emerging markets sectors that are not included in the index.
Experience: VMSAX is run by Vanguard Fixed Income Group, which has distinguished itself in managing active bond funds for more than 40 years. VMSAX will celebrate its four-year anniversary since inception on October 12, 2025.
Portfolio managers Michael Chang, Daniel Shaykevich, and Arvind Narayanan each have more than two decades of investment experience.
A competitive advantage: The fund’s Admiral Shares expense ratio is 0.30%. That’s among the lowest-cost options in the category.1 That helps investors retain more of their potential returns and enables the management team to be more thoughtful about adding risk, rather than possibly taking higher risks simply to overcome a high fee hurdle rate.
Use case: Because of its credit orientation, VMSAX may pair well with a strategy that is focused more on government-related securities. That could be funds that invest primarily in U.S. Treasuries or U.S. mortgages like a pure U.S. government product or a product like Vanguard Total Bond Market Index.
Notes:
- For more information about Vanguard funds and 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 Multi-Sector Income Bond ETF is not to be confused with the similarly named Vanguard Multi-Sector Income Bond Fund. These products are independent of one another. Differences in scale, certain investment processes, and underlying holdings between the ETF and its mutual fund counterpart are expected to produce different investment returns by the products.
- 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.
- Bonds of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. 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.
- U.S. government backing of Treasury or agency securities applies only to the underlying securities and does not prevent share-price fluctuations. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest.
- CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.