TAXABLE AND TAX-EXEMPT

Active Fixed Income

Diversify your clients' portfolios with active fixed income funds.

Our funds

Helping your clients succeed over the long run

Consistent bond fund performance doesn't just happen. It takes analysis, and research.

To help your clients reach their goals, you can take advantage of our experts' rigorous and time-tested approach to active bond fund management.

You'll find our fixed income management team's approach can help your clients meet their goals. How? Start by seeing how we compare with our competition: 92% of Vanguard active bond funds outperformed their peer-group averages at 5 years and 82% of Vanguard active taxable bond funds were in the top quartile of peers at 3 years.1

This consistent outperformance is achieved through our long-term, sophisticated approach, smart risk-taking, and commitment to remain true-to-label. As a result, our funds can help provide income to your clients, improve risk-adjusted returns, and preserve capital. Moreover, with a 0.10% asset-weighted expense ratio—a fourth of the industry average—your client's money may go further.2

Compare bond funds

See how VCOBX Core Bond Fund stacks up against the competition. 

1 For the one-year period, 48 out of 54 Vanguard active bond funds outperformed their peer-group averages. For the three-year period, 47 of 52 Vanguard active bond funds outperformed their peer-group averages. For the five-year period, 44 of 48 Vanguard active bond funds outperformed their peer-group averages. For the ten-year period, 38 of 44 Vanguard active bond funds outperformed their peer-group averages. All data as of December 31, 2020. Results will vary for other time periods. Only funds with a minimum one-, three-, five-, or ten-year history, respectively, were included in the comparison. Source: Lipper, a Thomson Reuters Company. Note the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. View most recent fund performance

For the three-year period, 23 of 28 active taxable fixed income fund share classes exhibited top-quartile performance relative to peer funds in their Lipper categories. For the five-year period, 16 of 24 active taxable fixed income fund share classes exhibited top-quartile performance relative to peer funds in their Lipper categories. For the ten-year period, 17 of 22 active taxable fixed income fund share classes exhibited top-quartile performance relative to peer funds in their Lipper categories. Results will vary for other time periods. Only funds with a minimum three-, five-, or ten-year history, respectively, were included in the comparison. (Source: Lipper, a Thomson Reuters Company.) 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 www.vanguard.com/performance. 28 of 32 of active taxable fixed income fund share classes are in the lowest quartile of expense ratios. (Source: Morningstar.) All data as of December 31, 2020.

2 Note: Vanguard calculations, based on data from Morningstar, Inc., as of December 31, 2021, show that Vanguard active fixed income funds had an average asset-weighted expense ratio of 10.4 basis points, compared with an average asset-weighted expense ratio of 49.0 basis points for non-Vanguard active fixed income funds.

3 During the period, 385 funds (including both open-end and ETFs) were included in the US Fund Intermediate Core Bond Morningstar category. Only funds with a minimum three-year history are included for comparison. Results will vary over other time periods. 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 www.vanguard.com/performance

Featured Insights

Our latest fixed income insights

 

Process and philosophy

How we're designed for outperformance

Our goal is long-term client outcomes. To achieve that, our specialized teams follow a disciplined, risk-aware process. We do not rely on directional bets, but instead we aim for consistent outperformance across a diverse set of strategies.

Philosophy

Top-down and bottom-up approach

Fundamental security selection layered with broader macroeconomic perspectives is essential for success in fixed income.

True-to-label investment solutions

We thoughtfully define the opportunity set for key risk and return drivers for each fund so you know what to expect.

Diversified sources of alpha

Our deeply specialized yet collaborative team-based approach reduces sector bias and improves relative value decisions.

Smart-risk taking

We hold an advantage over our competitors with an asset-weighted expense ratio of 0.11%, compared with 0.59% for all other active fixed income funds in the industry, according to Morningstar data as of June 30, 2020. This advantage limits the need for top-down directional risk and helps reduce the probability of large losses. And it allows us to focus on our highest conviction strategies.

Concentric circle chart showing Vanguard's active fixed income collaborative investment process, with each circle representing a different team's input: Top-down macroeconomic analysis and bottom-up sector views inform credit and rates strategy; credit and rates strategy informs portfolio management; and a back-and-forth exists between portfolio management and subsector and issuer selection. Outer circle represents governance and risk oversight that surrounds the entire process.

Process

Governance and risk oversight

The Senior Investment Committee oversees fund investment policies and guardrails. Risk managers analyze portfolio positioning and consider market stress scenarios.

Macroeconomic analysis

Vanguard's Senior Investment Committee and Investment Strategy Group produce longer-term views on the economy, policy, and market returns.

The analyses inform the risk-management and investment teams.

Sector views

Portfolio managers, analysts, and traders assess credit fundamentals, technicals, valuations, and risks. Based on their assessments, they make sector allocation recommendations.

Credit and rates strategy

Heads of credit and rates form views on rates and credit sectors, looking for cross-sector relative value. Their review forms the basis for recommendations to portfolio managers.

Subsector and issuer selection

Portfolio managers, analysts, and traders manage sector allocations across portfolios.

Sector teams include: U.S. investment-grade corporate, European/Asia-Pacific corporate, emerging markets and sovereign debt, structured products, high-yield corporate, mortgage-backed securities, U.S. Treasuries and TIPS, and global rates.

Portfolio management

Lead portfolio managers determine portfolio asset allocation and strategy, including risk factor targets and ranges. They have full discretion to implement their views and are responsible for portfolio performance.

Tools

Related tools

 

Use our tools for reliable, unbiased data for Vanguard and non-Vanguard products. Include ETFs and mutual funds from any fund family. Independent analysis by Morningstar provides unbiased results.

Portfolio analytics

Create and evaluate the fixed income portion of client portfolios. Analyze hypothetical performance risk statistics, country diversification, asset allocation, compare two portfolios side by side, and more.

Compare products

Easily compare up to five fixed income products in a convenient side-by-side layout. Generate custom, client-ready PDFs and easily email the online comparisons.

Have questions about active fixed income? Contact us.

Disclosures and footnotes

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

Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.

Diversification does not ensure a profit or protect against a loss.

Tax loss harvesting involves certain risks, including, among others, the risk that the new investment could have higher costs than the original investment and could introduce portfolio tracking error into your accounts. There may also be unintended tax implications. Prospective investors should consult with their tax or legal advisor prior to engaging in any tax-loss harvesting strategy. Vanguard does not provide tax or legal advice.

For more information about Vanguard funds or Vanguard ETFs, view detailed product information or call 800-997-2798 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.

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.

Although the income from municipal bonds held by a fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.

© 2020 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Morningstar Rating™ for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a 3-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for 36–59 months of total returns, 60% 5-year rating/40% 3-year rating for 60–119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods.