VCOBX, the actively managed core bond fund, is about 15% treasuries and 25% government MBS, and the credit component has a higher average credit quality than the portfolio held by VCIT. VCOBX is less risky than VCIT.This is not an advantage of the fund, but a trade-off of risk versus return. Vanguard's core bond fund wasn't around in 2008, but you can see what other bond funds did. For example, compare the performance of Vanguard Intermediate-Term Investment Grade to Total Bond Market; Total Bond Market was steady in 2008 while Intermediate-Term Investment-Grade lost value.
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For this risk level, I would now prefer VCIT (Vanguard Intermediate-Term Corporate ETF), but it doesn't have a long enough history for a direct comparison.
The credit portfolio of VCOBX has a higher average credit rating than that of the total bond market index, but the lower allocation to treasuries in VCOBX should still lead to it being a little bit riskier than a total bond market index. VCOBX and a total bond market index fund are both good intermediate bond funds, though I have a bit of a preference for a total bond fund among those two.
Statistics: Posted by Northern Flicker — Fri Feb 21, 2025 1:04 am — Replies 6 — Views 949