Return to a strategic allocation—help avoid reinvestment risk

The Fed has resumed rate cuts amid a softening economy, leading Vanguard to believe that we may be heading into a new rate environment. This presents an opportunity to help your clients reevaluate their fixed income investments and consider a return to strategic allocations.

Shifting focus back to the strategic objective of the fixed income portfolio and the aligned mix of bond types, maturities, and risk profiles can help clients whose portfolios have gotten off track. This reallocation can be a way to build resilience, manage risk, and achieve financial goals more reliably in an unpredictable economic environment. Vanguard Core and Core-Plus Bond ETFs can return fixed income portfolios to a strategic allocation for multiple client goals.

Ask yourself, what am I trying to accomplish with fixed income?

Strategies to mitigate reinvestment risk

Reinvestment risk is a critical consideration for fixed income investors, especially in a changing interest rate environment. As the Fed resumes rate cuts, clients holding an abundance of soon-to-mature bonds—like ultrashort—are at risk of reinvesting proceeds at lower yields. Core bond funds can serve as an anchor for your clients’ fixed income portfolios with intermediate-term duration.

Find longer durations with Vanguard core bond ETFs

Vanguard’s actively managed Core and Core-Plus Bond ETFs give you access to low-cost, institutional quality¹ investments for your clients. Both ETFs feature intermediate durations, making investments in them a solid strategy to avoid reinvestment risk.

Actively managed by a deep bench of experts

Vanguard Fixed Income Group is among the world’s largest bond fund managers, overseeing more than $473 billion in actively managed fixed income funds.

Vanguard’s team of about 140 investment professionals has been managing active fixed income for over 45 years.² Our size and reputation provide us with extensive relationships in the markets that can help with trading and access to new issues.

Fund managers

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Vanguard Core Bond ETF (VCRB)

Vanguard Core-Plus Bond ETF (VPLS)

1 “Institutional quality” in this context is meant to convey a level of professional rigor and expertise combined with low costs.

2 Vanguard, as of December 31, 2024.

For more information about Vanguard funds and Vanguard ETFs, visit advisors.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.

All investing is subject to risk, including possible loss of principal.

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.

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

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