U.S. News & World Report: 7 Best Vanguard Bond Funds to Buy
Low fund fees and diversification
August 2, 2023 —
Running Point and I were quoted by U.S. News & World Report in an article — by Tony Dong, MSc, “7 Best Vanguard Bond Funds to Buy” — regarding bond funds with an attractive combination of low fees and high diversification.
Quoted article excerpts are below:
Vanguard Total International Bond ETF (BNDX)
“BNDX offers diversification benefits by including investment-grade bonds issued by governments and corporations outside the United States, and thus provides exposure to international bonds denominated in various currencies,” says Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors. This ETF is essentially the international variant of BND.
By diversifying a bond allocation internationally, investors can benefit from different interest rate regimes in foreign countries, and hedge the remote-but-potentially-devastating risk of the U.S. bond market collapsing. In addition, BNDX is currency-hedged to mitigate foreign exchange rate fluctuations. The ETF pays a YTM of 5.3%, has an average duration of 7.5 years and charges a 0.07% expense ratio.
Vanguard High-Yield Corporate Fund Investor Shares (VWEHX)
BND includes investment-grade corporate bonds that are rated BBB or higher by two or more of the major credit rating agencies. While less at risk of default, they don’t offer the highest yields. Investors seeking the highest possible income might consider a high-yield bond fund like VWEHX, which holds non-investment grade bonds and currently pays a YTM of 7.1%
“This fund aims to provide potentially higher income through exposure to bonds with higher credit risk by investing in lower-rated, high-yield corporate bonds,” Schulman says.
Some 48.3% of VWEHX’s bonds are rated BB, and 34.3% are rated B. The fund charges a 0.23% expense ratio.
. . .
Deep doubts, deep wisdom; small doubts, small wisdom.
~~Chinese Proverb
. . .
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23–81
Originally published at https://money.usnews.com.
