Core Plus Bond Fund any advantages

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InTheMidwest
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Joined: Mon Jul 12, 2021 10:19 am

Core Plus Bond Fund any advantages

Post by InTheMidwest »

Received email of new VG bond fund: the Core Plus Bond Fund, VCPAX $50K min. VCPIX $3K min. Does anyone see any advantages to this fund in a conservative leaning portfolio? It is on the "riskier" side of conservative investments and will have a bit higher expense ratio than other bond funds. I am not seeing much of an advantage but am I missing something? Thanks in advance.
sycamore
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Joined: Tue May 08, 2018 12:06 pm

Re: Core Plus Bond Fund any advantages

Post by sycamore »

InTheMidwest wrote: Wed Oct 13, 2021 5:21 pm Received email of new VG bond fund: the Core Plus Bond Fund, VCPAX $50K min. VCPIX $3K min. Does anyone see any advantages to this fund in a conservative leaning portfolio? It is on the "riskier" side of conservative investments and will have a bit higher expense ratio than other bond funds. I am not seeing much of an advantage but am I missing something? Thanks in advance.
I don't see a clear advantage that overcomes the manager risk or the unknown amounts of extra credit and term risk. In addition to the usual U.S. Treasury, agency mortgage-backed, and U.S. investment-grade corporate securities, Vanguard says the fund can also have "emerging markets debt of all credit ratings" and may own up to 35% in US junk bonds. I own some EM debt via my shares in Total International Bond Fund (via some LifeStrategy and Target Date funds). So far the EM debt exposure is relatively little and I'd like to keep it that way. With the new fund, I'd be giving that selection up to the fund managers.

I figure if I'm going to increase risk, I'd prefer to slightly increase stock exposure than to take on those risks in bonds. Do you have a preference one way or another, or maybe ambivalence?

There was some general discussion of the Core Plus Bond fund in another thread. Although note that thread actually discusses several Vanguard fund changes not just the new Core Plus Bond fund, so you'll have to wade through a number of posts.
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