Simplifying fixed income portfolios with Vanguard Core-Plus Bond ETF

Advisors often use multiple active strategies in their fixed income portfolios. This can lead to a portfolio that lacks cohesion and transparency, making it difficult to know what you own. Vanguard Core-Plus Bond ETF (VPLS) offers an institutional quality* solution to consolidate these critical core positions.

Understanding your exposures

Owning several active strategies, each with their own investment approach and market expectations, can make it difficult to understand the exposures in your client’s portfolio at any given point in time. Active fixed income funds often draw from overlapping sectors such as high-yield, investment-grade corporates, emerging markets, and structured products. Holding multiple such funds can lead to:

• Overconcentration in riskier segments, especially in high-yield and emerging market bonds, which reduces the equity risk diversification benefit intended by an allocation to fixed income.
• Neutralization in portfolio exposures by incorporating strategies with potentially opposing investment views.
• Increase in due diligence and monitoring to oversee multiple funds and managers.
• Potentially higher all-in costs.

The Vanguard Core-Plus Bond ETF solution

Adding VPLS to your clients’ portfolios can help deliver consistency and transparency while navigating the fixed income markets. Our differentiated approach to risk-taking provides a balance between quality and credit risk. This ETF may offer several potential benefits, including:

• A single solution that manages risk in your clients’ fixed income portfolio for you, helping you navigate different market environments and freeing up your time.
• Professional asset allocation of your fixed income sleeve by Vanguard's team of experts.
• Simplified due diligence because you only need to approve and oversee one management team.
• Low cost of 20 bps.

By leveraging VPLS, you can streamline your clients’ fixed income portfolios, reduce complexity, and help ensure a more balanced and risk-managed approach. This not only simplifies the management process, it also provides a professional and cost-effective solution.

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

For more information about Vanguard funds, visit advisors.vanguard.com or call 800-997-2798 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund 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 possible loss of principal. Diversification does not ensure a profit or protect against a loss. 

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.

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.

Investments in bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. 

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