Wellington Fund Reopening [also, two new active bond funds]

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yakers
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New VG Multi Sector Bond Fund

Post by yakers »

I saw a reference to VG starting a multi sector bond fund, I am trying to figure out if this is a good alternative to BND, I am 71 & retired and bond income is nice but not necessary, hold FI mostly for ballast, about 50/50 AA. Just trying to figure out what to do to get something out of fixed income part of AA.

http://redirect.viglink.com/?key=71fe21 ... 00155.html
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Wellington Fund Reopening [also, two new active bond funds]

Post by lazynovice »

Buried in this announcement about two new active bond funds is an announcement that Wellington is re-opening.

https://www.prnewswire.com/news-release ... 44332.html

Reopening Vanguard Wellington Fund
Vanguard also announced today that, due to improved fund liquidity and capacity, the firm will reopen Vanguard Wellington Fund to all investors immediately. The fund is managed by Wellington Management Company LLP and has been closed to new financial advisory, institutional, and intermediary investors since 2013.

Vanguard dedicates considerable resources to the oversight of its fund lineup, ensuring clients have access to sound, lasting investment products that meet their long-term needs. As part of this process, Vanguard will occasionally close certain funds to protect existing shareholders from high levels of cash flow.
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Re: New VG Multi Sector Bond Fund

Post by sycamore »

Here's a vanguard.com page with some info: https://advisors.vanguard.com/insights/ ... usbondfund

(I didn't want to click the viglink.com URL.)

One fund with two share classes.

They're calling it a Core Bond Plus fund. This is industry nomenclature. It means they're taking on extra risk (beyond that of an typical "Aggregate"-based index fund). Either in the form of duration or credit risk.

VG already has an active Core Bond Fund. My guess is they're rolling out this new one to better compete for financial advisor mind share.

Edit:. oops I didn't read the vanguard page far enough. There is also the new multi sector fund - see the page for more details.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (Vanguard press release). I also clarified the thread title.
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Re: New VG Multi Sector Bond Fund

Post by Angst »

Here's a press release dated July 29, 2021:
https://www.prnewswire.com/news-release ... 44332.html

My underlining below:
PR Newswire wrote:Vanguard Announces Plans to Launch Two New Active Bond Funds

Firm Also Reopens Wellington Fund
PR Newswire wrote:Multi-Sector Income Bond will offer exposure primarily to U.S. investment-grade securities, U.S. high-yield corporate securities, and emerging markets debt of all credit quality ratings. Multi-Sector Income Bond will have an estimated expense ratio of 0.40% for Investor Shares and 0.30% for Admiral Shares, compared with an average expense ratio of 0.98% for industry peers1.

1 Source: Morningstar, Vanguard.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by Misenplace »

The two threads running on this same topic have been merged.

Moderator Misenplace
sycamore
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Re: New VG Multi Sector Bond Fund

Post by sycamore »

yakers wrote: Fri Jul 30, 2021 1:31 pm I saw a reference to VG starting a multi sector bond fund, I am trying to figure out if this is a good alternative to BND, I am 71 & retired and bond income is nice but not necessary, hold FI mostly for ballast, about 50/50 AA. Just trying to figure out what to do to get something out of fixed income part of AA.

http://redirect.viglink.com/?key=71fe21 ... 00155.html
I don't think Vanguard Multi-Sector Income Bond Fund will be a good alternative to Total Bond Market Fund.

From https://advisors.vanguard.com/insights/ ... usbondfund
The fund will offer exposure to three primary satellite allocations for fixed income investors: investment-grade securities, high-yield corporate securities, and emerging markets debt of all qualities. The total below-investment-grade exposure of the portfolio will be capped by a limit in the prospectus at 65%.
Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by tj »

Perhaps Vanguard Core-Plus Bond Fund will be like BCOIX but with lower fees.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by sunnywindy »

Having a multi-sector bond fund is probably a good move from Vanguard - at least from a commercial point of view. There don't seem to be many multisector bond funds that I could see on Morningstar so the new Vanguard offering could someday become the top dog.

I would say that the indexed Columbia Diversified Fixed Income Allocation ETF (DIAL) at 0.29% ER will give Vanguard some retail competition, but maybe not with institutions. However, the multisector bond category is so wide open that you can have very different outcomes within the category, yet each fund could still be fulfilling it's mandate.

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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by darkhorse346 »

Besides Vanguard, what other brokerages allow you to invest in Wellington Fund?

I've checked Fidelity, Schwab, E-Trade, and others. I don't see it being available to new investors.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by Orangutan »

darkhorse346 wrote: Sat Jul 31, 2021 5:44 am Besides Vanguard, what other brokerages allow you to invest in Wellington Fund?

I've checked Fidelity, Schwab, E-Trade, and others. I don't see it being available to new investors.
Not positive, but I believe Chase Youinvest or whatever it has changed to allows it.
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Re: New VG Multi Sector Bond Fund

Post by Robot Monster »

sycamore wrote: Fri Jul 30, 2021 3:47 pm Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
Seems these funds are not meant to be ballast. "The proposed funds reflect Vanguard's continuous effort to improve long-term outcomes for fixed income investors seeking outperformance." Seems to be meant for people who want more juice out of their bonds, now that the yield of safe bonds has been crushed by the heavy foot of the Fed.

You gotta give the people want they want, I guess.

Kudos to Vanguard for not having a long-term TIPS fund. /s
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Re: New VG Multi Sector Bond Fund

Post by tibbitts »

sycamore wrote: Fri Jul 30, 2021 3:47 pm Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
I think a lot of people's definition of "ballast" included having a yield that would roughly keep up with inflation, and that's understandably driving a lot of the demand for products like this.
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Re: New VG Multi Sector Bond Fund

Post by grabiner »

sycamore wrote: Fri Jul 30, 2021 3:47 pm From https://advisors.vanguard.com/insights/ ... usbondfund
The fund will offer exposure to three primary satellite allocations for fixed income investors: investment-grade securities, high-yield corporate securities, and emerging markets debt of all qualities. The total below-investment-grade exposure of the portfolio will be capped by a limit in the prospectus at 65%.
Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
It isn't unreasonable to hold a fund which contains both the ballast and risky investments. The standard example is a balanced fund such as Wellington, which holds 65% stock, and 35% high-quality bonds to reduce the risk. But you could also do this with a fund which holds 50% junk bonds and 50% high-quality bonds, recognizing that only the high-quality bonds give you the full benefit of risk reductions.

The downside is that advisors may treat the multi-sector funds as serving the same role in a portfolio as core bond funds, and investors won't recognize the risk until the next economic downturn when the high-yield bonds lose value to downgrades and defaults.
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Re: New VG Multi Sector Bond Fund

Post by yakers »

tibbitts wrote: Sat Jul 31, 2021 10:00 am
sycamore wrote: Fri Jul 30, 2021 3:47 pm Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
I think a lot of people's definition of "ballast" included having a yield that would roughly keep up with inflation, and that's understandably driving a lot of the demand for products like this.
Well, that is exactly what is driving me. It would be nice if my fixed income keep up with inflation and even better to beat it a bit, but how much is risk increased? Does having a well managed multi-sector fund increase risk too much? What about reducing equities a bit (say 5% from 50% to 45%) to have the same AA risk. Trying to understand if this new bond fund is a better fit than BND.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by mkc »

darkhorse346 wrote: Sat Jul 31, 2021 5:44 am Besides Vanguard, what other brokerages allow you to invest in Wellington Fund?

I've checked Fidelity, Schwab, E-Trade, and others. I don't see it being available to new investors.
Likely because it just opened up on Friday. Might want to check again early next week.
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Re: New VG Multi Sector Bond Fund

Post by tibbitts »

yakers wrote: Sat Jul 31, 2021 10:54 am
tibbitts wrote: Sat Jul 31, 2021 10:00 am
sycamore wrote: Fri Jul 30, 2021 3:47 pm Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
I think a lot of people's definition of "ballast" included having a yield that would roughly keep up with inflation, and that's understandably driving a lot of the demand for products like this.
Well, that is exactly what is driving me. It would be nice if my fixed income keep up with inflation and even better to beat it a bit, but how much is risk increased? Does having a well managed multi-sector fund increase risk too much? What about reducing equities a bit (say 5% from 50% to 45%) to have the same AA risk. Trying to understand if this new bond fund is a better fit than BND.
Although not Boglehead-approved, my preference would be to invest separately in aggressive bonds and "safer" fixed income. I haven't looked at this fund but in general "multi-sector high yield" would be appealing for me, maybe even with some very high-yielding equities mixed in. I don't want to pay a higher expense ratio for a manager to invest in treasuries or "safe" corporate bonds. When my multi-sector mostly-bond fund plunges 25% or whatever I do want to have some other investment that doesn't.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by GaryA505 »

Looks like the Vanguard Core-plus bond fund might be similar to Fidelity Total Bond (FTBFX).
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by tj »

GaryA505 wrote: Sun Aug 01, 2021 12:28 pm Looks like the Vanguard Core-plus bond fund might be similar to Fidelity Total Bond (FTBFX).
What is in the FIdelity Total Bond fund?

Would it not be similar to the Baird Core Plus ?
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by Dave55 »

tj wrote: Sun Aug 01, 2021 12:29 pm
GaryA505 wrote: Sun Aug 01, 2021 12:28 pm Looks like the Vanguard Core-plus bond fund might be similar to Fidelity Total Bond (FTBFX).
What is in the FIdelity Total Bond fund?

Would it not be similar to the Baird Core Plus ?
Fidelity Total Bond details:

https://www.morningstar.com/funds/xnas/ftbfx/quote

https://fundresearch.fidelity.com/mutua ... =sq-NavBar

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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by tj »

Dave55 wrote: Sun Aug 01, 2021 12:34 pm
tj wrote: Sun Aug 01, 2021 12:29 pm
GaryA505 wrote: Sun Aug 01, 2021 12:28 pm Looks like the Vanguard Core-plus bond fund might be similar to Fidelity Total Bond (FTBFX).
What is in the FIdelity Total Bond fund?

Would it not be similar to the Baird Core Plus ?
Fidelity Total Bond details:

https://www.morningstar.com/funds/xnas/ftbfx/quote

https://fundresearch.fidelity.com/mutua ... =sq-NavBar

Dave
Sure, but what information was used to determine that the new Vanguard fund be an equivalent to it? So far, there is only the press release available, right?
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by GaryA505 »

tj wrote: Sun Aug 01, 2021 12:36 pm
Dave55 wrote: Sun Aug 01, 2021 12:34 pm
tj wrote: Sun Aug 01, 2021 12:29 pm
GaryA505 wrote: Sun Aug 01, 2021 12:28 pm Looks like the Vanguard Core-plus bond fund might be similar to Fidelity Total Bond (FTBFX).
What is in the FIdelity Total Bond fund?

Would it not be similar to the Baird Core Plus ?
Fidelity Total Bond details:

https://www.morningstar.com/funds/xnas/ftbfx/quote

https://fundresearch.fidelity.com/mutua ... =sq-NavBar

Dave
Sure, but what information was used to determine that the new Vanguard fund be an equivalent to it? So far, there is only the press release available, right?
Speculation. It appears VCORX has been slightly less risky than FTBFX or BCOIX. I'm guessing that Vanguard is trying to fill a gap in their fund line-up. They're not inventing anything that hasn't been done before.
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Re: New VG Multi Sector Bond Fund

Post by sycamore »

tibbitts wrote: Sun Aug 01, 2021 8:55 am
yakers wrote: Sat Jul 31, 2021 10:54 am
tibbitts wrote: Sat Jul 31, 2021 10:00 am
sycamore wrote: Fri Jul 30, 2021 3:47 pm Total Bond Market Fund holds no below investment grade funds. The new Multi-Sector fund can hold up to 65% of its assets in below investment grade bonds.

As far as I can tell, Total Bond Market Fund holds no emerging market bonds. The new Multi-Sector fund can hold emerging markets bonds.

That's a significant increase in risk, which doesn't fit with your "hold FI mostly for ballast".
I think a lot of people's definition of "ballast" included having a yield that would roughly keep up with inflation, and that's understandably driving a lot of the demand for products like this.
Well, that is exactly what is driving me. It would be nice if my fixed income keep up with inflation and even better to beat it a bit, but how much is risk increased? Does having a well managed multi-sector fund increase risk too much? What about reducing equities a bit (say 5% from 50% to 45%) to have the same AA risk. Trying to understand if this new bond fund is a better fit than BND.
Although not Boglehead-approved, my preference would be to invest separately in aggressive bonds and "safer" fixed income. I haven't looked at this fund but in general "multi-sector high yield" would be appealing for me, maybe even with some very high-yielding equities mixed in. I don't want to pay a higher expense ratio for a manager to invest in treasuries or "safe" corporate bonds. When my multi-sector mostly-bond fund plunges 25% or whatever I do want to have some other investment that doesn't.
tibbitts' preference to untether the aggressive bonds from the safer ones seems like a good idea if you want aggressive bonds and are willing to incur some complexity (having multiple bond fund instead of one).

I suggest that whether you untether the aggressive bonds from the safer bonds or use a combo multi-sector fund that contains aggressive bonds, it's reasonable to ask why it's better to use any aggressive bond sector rather than simply slightly increasing stock exposure (which is also aggressive/risky). I have a hard time coming up with a good answer to that question. I don't see the aggressive bond sectors as providing a safe haven when the markets are panicking. The aggressive stuff does provide exposure to certain markets and certain kinds of risk, but it's not clear to me I really need them.
yakers wrote: Sat Jul 31, 2021 10:54 am but how much is risk increased? Does having a well managed multi-sector fund increase risk too much? What about reducing equities a bit (say 5% from 50% to 45%) to have the same AA risk. Trying to understand if this new bond fund is a better fit than BND.
To answer the first question, one might run a back test to see how a comparable fund performed in times of stress. But we can't figure out what's comparable because the new Vanguard fund doesn't even exist yet. Even if we could, who's to say how the Vanguard active managers will adjust the portfolio during future times of stress?

Another way to answer the first question is to learn about the various kinds of debt securities the fund might invest in. Understand what specific risks those securities come with. Find some funds that invest solely in those securities (e.g., a "pure" high-yield; a "pure" emerging markets fund) and see how those individual funds performed in times of stress. This back test would only show you how the constituent parts of a multi-sector fund performed, rather than the fund as a whole, but it might give you some insight.

For your second question about a "well managed multi-sector fund", I think one clear risk is manager risk. Vanguard has plenty of experience managing all kinds of bonds, so that helps. But it remains to be seen if the fund will be "well managed". That's just an inherent risk of using an active manager. Whether it's too much risk is up to you, the individual investor. I don't think there's a right answer anyone here can provide for you. It may just come down to "do I trust Vanguard?"

I think your idea to reduce equities as a counterweight to increasing aggressive bond exposure seems like a good idea, and has been commonly suggested in past threads discussing high yield bond funds. There are rules of thumb about how much to reduce stock allocation for every unit of aggressive bond risk. Hard to say how reliable or helpful they are. And one possible problem with the idea: say you have a large exposure to a multi sector fund, and the fund managers decide to switch, say, their 40% EM exposure to US Treasuries -- do you now need to increase your stock allocation because you no longer have so much aggressive bond exposure? In any case, best that your IPS has simple rules for buying or selling a multi-sector fund.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by darkhorse346 »

mkc wrote: Sat Jul 31, 2021 11:46 am
darkhorse346 wrote: Sat Jul 31, 2021 5:44 am Besides Vanguard, what other brokerages allow you to invest in Wellington Fund?

I've checked Fidelity, Schwab, E-Trade, and others. I don't see it being available to new investors.
Likely because it just opened up on Friday. Might want to check again early next week.
You are correct. I do see that Wellington (Investor share class) is available at Fidelity. Unfortunately, Admiral shares are not available here and there is a $75 fee to purchase.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by OldBallCoach »

darkhorse346 wrote: Sat Jul 31, 2021 5:44 am Besides Vanguard, what other brokerages allow you to invest in Wellington Fund?

I've checked Fidelity, Schwab, E-Trade, and others. I don't see it being available to new investors.
I am at TIAA and we can do it there...of course we moved FROM Vanguard to TIAA and transferred the funds to TIAA in kind...but we add to it on a monthly basis so it must work?
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Vanguard files for active Core-Plus Bond Fund

Post by peppers »

[Merged into existing thread on the topic- Moderator Misenplace]

https://advisors.vanguard.com/insights/ ... 0567&suid=

Expected to launch in the fourth quarter of 2021.
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Re: Vanguard files for active Core-Plus Bond Fund

Post by Angst »

Here's a thread already addressing this:
viewtopic.php?f=10&t=354757&newpost=6155323
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Coming Soon: Vanguard Core-Plus Bond Fund

Post by arcticpineapplecorp. »

[Thread merged into here --admin LadyGeek]

https://investornews.vanguard/coming-so ... bond-fund/
We’re introducing a new bond fund to our lineup of active fixed income products: Vanguard Core-Plus Bond Fund. Designed to be an all-in-one bond solution for your overall portfolio, it has a conservative-to-moderate risk profile. You can use it as your only bond holding or combine it with our other bond funds for a more customized balance of risk and return.

The fund will launch on October 25. However, you’ll have the opportunity to invest in it early during a subscription period that will start on or around October 12...

Outperformance

Our Fixed Income Group will pursue outperformance of the fund’s benchmark* by investing in carefully selected taxable fixed income securities, including those in high-yield corporates and emerging markets debt.
I'll stick with total bond market index fund.

stretching for yield is a real thing, even at Vanguard it seems.

I'll take my risk on the stock side of the portfolio. Bonds are for safety.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by abuss368 »

Not sure if an active strategy makes sense after fees. I am surprised Vanguard is going down this road. I can’t help but think Jack Bogle would not approve.

The risk of an active bond fund? Credit and term. Related to credit one only has to recall Michigan and Puerto Rico bonds.

I will stay the course with Total Bond.

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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by ruralavalon »

When both are available I prefer a good index fund over a good actively managed fund, and a good core bond fund over a good core plus bond fund.

The addition of this fund type is not very surprising, the expense ratio is low at 0.20%, many existing Vanguard bond funds are actively managed, and that has been true for a long time even during the Jack Bogle era at Vanguard. Some actively managed funds are good funds if they have low expense ratios.

I confess :( I once bought actively managed Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares (VFIDX) ER 0.10%, just assuming that it was an index fund because of its low expense ratio. Most our bonds were Treasury STRIPS and I wanted to diversify with some good credit quality corporate bonds, so VFIDX was a good choice for what I wanted to do.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by galawdawg »

abuss368 wrote: Thu Sep 09, 2021 6:54 pm I can’t help but think Jack Bogle would not approve...

I will stay the course with Total Bond.

Tony
The "will pursue outperformance" fund with higher fees strategy mirrors what Vanguard is doing with Vanguard PAS. Adding higher-cost funds that "will seek to outperform the broader U.S. market"... :|

And we all know what Jack had to say about the likelihood of actively-managed funds outperforming the market. I wonder if perhaps Vanguard is riding on the coattails of the success of Jack's low-cost index fund approach to imply that somehow Vanguard will be able to accomplish what other fund managers can't....consistent, long-term outperformance of the market after consideration of costs.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by abuss368 »

galawdawg wrote: Thu Sep 09, 2021 7:15 pm
abuss368 wrote: Thu Sep 09, 2021 6:54 pm I can’t help but think Jack Bogle would not approve...

I will stay the course with Total Bond.

Tony
The "will pursue outperformance" fund with higher fees strategy mirrors what Vanguard is doing with Vanguard PAS. Adding higher-cost funds that "will seek to outperform the broader U.S. market"... :|

And we all know what Jack had to say about the likelihood of actively-managed funds outperforming the market. I wonder if perhaps Vanguard is riding on the coattails of the success of Jack's low-cost index fund approach to imply that somehow Vanguard will be able to accomplish what other fund managers can't....consistent, long-term outperformance of the market after consideration of costs.
That is definitely an interesting theory. I have family in Vanguard PAS. They are in the Vanguard Four Fund Portfolio. No active funds to date.

Tony
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by ronno2018 »

Not sure if Vanguard marketing folks read these forums but there is a balance between growing your customer base focusing on selling "dreams of riches" and just knuckling down on being efficient.

Sure, maybe you can pull some people from "Edward Jones" and similar outfits and thus really benefit the customer, but maybe consumer education is the way to do that?
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by TOM1964 »

In her original Making the Most of Your Money book, Jane Bryant Quinn advised against ever buying a fund with “plus” in the name.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by gjlynch17 »

The current sibling of the to-be-launched fund is Vanguard Core Bond Fund (VCOBX) which is an actively managed fund that focuses on investment grade bonds. VCOBX has a five year track record and has outpaced Vanguard Total Bond Fund (VBTLX) by 0.65% annually. VCOBX does take marginal additional credit risk but this risk has yet to manifest itself in a negative manner as the standard deviation of VCOBX is comparable to VBTLX and the maximum drawdown of VBTLX has been greater than VCOBX.

https://tinyurl.com/bfvjyem8

VBTLX is a great fund but Vanguard also has some really good actively managed bond funds also and Core-Plus Bond Fund is likely to be another one.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by gjlynch17 »

[Duplicate post]
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by MishkaWorries »

Hasn't Vanguard always offered a lot of actively managed bond funds? I seem to remember someone saying that when I was surprised Vanguard's new ultra short term bond fund would be actively managed.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by abuss368 »

MishkaWorries wrote: Thu Sep 09, 2021 8:13 pm Hasn't Vanguard always offered a lot of actively managed bond funds? I seem to remember someone saying that when I was surprised Vanguard's new ultra short term bond fund would be actively managed.
Historically they have offered many “active” bond funds as listed on their website here:

https://investor.vanguard.com/mutual-fu ... nd-returns

Many of the “active” bonds funds may in fact function and perform like a “closet” index fund.

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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by Grt2bOutdoors »

abuss368 wrote: Thu Sep 09, 2021 8:36 pm
MishkaWorries wrote: Thu Sep 09, 2021 8:13 pm Hasn't Vanguard always offered a lot of actively managed bond funds? I seem to remember someone saying that when I was surprised Vanguard's new ultra short term bond fund would be actively managed.
Historically they have offered many “active” bond funds as listed on their website here:

https://investor.vanguard.com/mutual-fu ... nd-returns

Many of the “active” bonds funds may in fact function and perform like a “closet” index fund.

🚀
Tony
It’s clear to me that this new fund will be anything but a closet index fund. Let’s think about why they are offering it, there’s a demand for an all-in-one fund, there are some investors who don’t want to hold just US governments and corporates. There are investors who don’t want to overpay for an actively managed fund either. Seems like Vanguard is capitalizing on their strengths, low-cost and diversification. I think this fund will do fine compared to the competition.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by abuss368 »

Grt2bOutdoors wrote: Thu Sep 09, 2021 9:23 pm
abuss368 wrote: Thu Sep 09, 2021 8:36 pm
MishkaWorries wrote: Thu Sep 09, 2021 8:13 pm Hasn't Vanguard always offered a lot of actively managed bond funds? I seem to remember someone saying that when I was surprised Vanguard's new ultra short term bond fund would be actively managed.
Historically they have offered many “active” bond funds as listed on their website here:

https://investor.vanguard.com/mutual-fu ... nd-returns

Many of the “active” bonds funds may in fact function and perform like a “closet” index fund.

🚀
Tony
It’s clear to me that this new fund will be anything but a closet index fund. Let’s think about why they are offering it, there’s a demand for an all-in-one fund, there are some investors who don’t want to hold just US governments and corporates. There are investors who don’t want to overpay for an actively managed fund either. Seems like Vanguard is capitalizing on their strengths, low-cost and diversification. I think this fund will do fine compared to the competition.
That is interesting. Fair and reasonable that investors many not want to be boxed into just governments (low yields and risk) and corporations (higher yield and risk). An active strategy will have the flexibility to pursue alpha compared to the index.

I will be curious how fast the fund builds assets. In some respects many of Vanguard’s 180+ funds could be pruned and combined.

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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by tibbitts »

galawdawg wrote: Thu Sep 09, 2021 7:15 pm
abuss368 wrote: Thu Sep 09, 2021 6:54 pm I can’t help but think Jack Bogle would not approve...

I will stay the course with Total Bond.

Tony
The "will pursue outperformance" fund with higher fees strategy mirrors what Vanguard is doing with Vanguard PAS. Adding higher-cost funds that "will seek to outperform the broader U.S. market"... :|

And we all know what Jack had to say about the likelihood of actively-managed funds outperforming the market. I wonder if perhaps Vanguard is riding on the coattails of the success of Jack's low-cost index fund approach to imply that somehow Vanguard will be able to accomplish what other fund managers can't....consistent, long-term outperformance of the market after consideration of costs.
Weren't the majority of bond funds offered while Bogle ran Vanguard actively managed funds?
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by whodidntante »

One can make a convincing argument that costs matter. There are anomalies, Jim Simons et al, but you'll probably get through your "costs matter" PowerPoint deck without losing credibility.

But "active versus passive" is the battle of who could care less. I'm not certain there is a correct answer because the question isn't very good. Bogle owned active funds with his money. Was he wrong to do that?
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by Northern Flicker »

abuss368 wrote: Thu Sep 09, 2021 6:54 pm The risk of an active bond fund? Credit and term. Related to credit one only has to recall Michigan and Puerto Rico bonds.

I will stay the course with Total Bond.

Tony
Total bond has exposure to credit and term.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by tj »

We'll have to see how it compares to BCOIX, Baird's Core Plus Bond Fund. That fund has rather low fees for active management IIRC.

It's current make up:

https://content.rwbaird.com/BairdFunds/ ... -sheet.pdf
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by Northern Flicker »

I believe the Core Bond fund and this fund were created to compete with products like Pimco Total Return and other actively managed bond funds for 401K plan business.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by Northern Flicker »

tj wrote: Thu Sep 09, 2021 11:33 pm We'll have to see how it compares to BCOIX, Baird's Core Plus Bond Fund. That fund has rather low fees for active management IIRC.

It's current make up:

https://content.rwbaird.com/BairdFunds/ ... -sheet.pdf
Quite a bit higher ER (.55%) for BCOIX vs .2% for admiral shares and .3% for investor shares for the new Vanguard fund.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by smectym »

abuss368 wrote: Thu Sep 09, 2021 6:54 pm Not sure if an active strategy makes sense after fees. I am surprised Vanguard is going down this road. I can’t help but think Jack Bogle would not approve.

The risk of an active bond fund? Credit and term. Related to credit one only has to recall Michigan and Puerto Rico bonds.

I will stay the course with Total Bond.

Tony
Not sure. The bond world is still significantly less efficient than the equity universe. I suspect that good “active bond” management may still deliver value vs. a pure bond index fund. Of course “active” does introduce additional risk: and the bet can go wrong, and underperform the index. And active sports a higher ER.

All I’d say is that the pitch for active bond management *may* be marginally more persuasive than the same pitch for stocks.
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by gjlynch17 »

Northern Flicker wrote: Thu Sep 09, 2021 11:36 pm
tj wrote: Thu Sep 09, 2021 11:33 pm We'll have to see how it compares to BCOIX, Baird's Core Plus Bond Fund. That fund has rather low fees for active management IIRC.

It's current make up:

https://content.rwbaird.com/BairdFunds/ ... -sheet.pdf
Quite a bit higher ER (.55%) for BCOIX vs .2% for admiral shares and .3% for investor shares for the new Vanguard fund.
The "institutional" class of the Board Core Plus Bond Fund (BCOIX) only has a minimum investment of $10,000. Its 0.3% ER is 10bp higher than Vanguard's Core-Plus Bond Fund Admiral class.
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Re: Wellington Fund Reopening [also, two new active bond funds]

Post by LadyGeek »

I merged arcticpineapplecorp.'s thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: Coming Soon: Vanguard Core-Plus Bond Fund

Post by abuss368 »

Northern Flicker wrote: Thu Sep 09, 2021 11:29 pm
abuss368 wrote: Thu Sep 09, 2021 6:54 pm The risk of an active bond fund? Credit and term. Related to credit one only has to recall Michigan and Puerto Rico bonds.

I will stay the course with Total Bond.

Tony
Total bond has exposure to credit and term.
Correct all bond funds have this risk.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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