Bond funds

Core bonds

Institutional quality fixed income solutions designed to provide stability, income, and diversification.

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OVERVIEW

The role of core bonds in a portfolio

Core bonds serve these critical functions in an investment portfolio:

Income

Core bonds provide a predictable stream of interest payments.

 

Diversification

Bond returns often move differently than stocks, helping to smooth overall performance.

 

Risk mitigation

During equity market stress, core bonds can help offset losses in riskier assets.

Core bond versus core-plus strategies

Core and core-plus bond funds can be used as building blocks by advisors who want to customize client portfolios and retain hands-on control. Total bond funds, on the other hand, can provide a simple, total solution.
 

Type Objective Typical holdings Risk level
Core (building block) Emphasize safety and stability. U.S. Treasuries, agencies, investment-grade corporates. Low to moderate.
Core-plus (building block) Offers the potential for higher returns. Core holdings plus high-yield, emerging market, non-U.S., mortgage-backed, and asset-backed securities. Moderate.
Total bond (total solution) Provides the broadest diversification. U.S. and global bonds, investment-grade and high-yield, government, and private issuers. Generally moderate depending on allocation.

Vanguard's core bond advantage

We’re working to shift the balance with institutional quality1 bond funds you can offer to all your clients—funds built by a deep bench of experts to deliver consistency over time. Funds that have diverse sources of active performance. 

A deep bench of experts

Our goal is to achieve consistent outperformance. Navigating safely, year after year, requires expertise in interest rates, credit risk, macro-economics, bank policy, sector trends, geographic risk, and re-investment risk. Not to mention the teams that manage the technology, clean the data, develop better models, and analyze the results. Our unique scale allows us to invest across sectors, maturities, and geographies, and to use a wide range of strategies in security selection, sector allocation, and risk management.

That’s why Vanguard has a team of more than 200 experts whose expertise includes global bond index, global credit, global credit research, global rates and more. Our portfolio managers, analysts, and traders work together to pull the best investment ideas into our funds.

Meet our core and core-plus portfolio managers

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Portrait of Dan Shaykevich
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Vanguard’s core bond lineup

Vanguard offers both actively and passively managed mutual funds and ETFs. You can use our portfolio analytics tool to get a closer look. You can also compare multiple funds to see how they differ.

Active core bond ETFs

Index core ETF

Client conversations

Talking with clients about core bonds can help them understand the critical role these products play in helping to preserve capital, generate income, and provide diversification. Whether your clients are market-shy based on past financial crises or overexposed to equities, our client-approved materials can help you have these needed conversations.

 

Get the client-approved PDF

 

 

 

Portfolio analytics

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

Explore analytics

 

Explore subtopics

Vanguard bond funds
Disclosures and footnotes

1 “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 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.
  • 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.
  • 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.