Vanguard Long-Term Bond IndexVBLTX

Morningstar Rating

Fund Research and Analysis

by David Falkof

Vanguard Long-Term Bond Index is a well-run specialized fund, but it's not for most investors.

This bond fund's above-average yield may look attractive at first glance, but be warned that higher yields usually come with higher risks. So before you jump headfirst into the long-term bond waters, it's worth taking a minute to understand those risks. Read more

Kudos

Returns have kept pace with the index and blown past rivals over time.

Seasoned management.

Very low expenses. Read more

Risks

Long duration (a measure of interest-rate sensitivity) will weigh on returns when rates rise.

Like all index funds, this one courts "sample" risk, or the risk that it won't behave like the index that it's meant to track.

The fund's volatility may prompt investors to buy or sell it at inopportune times. Read more

Strategy

The fund strives to match the performance of the Barclays Capital US Long Government/Credit Index, which includes investment-grade U.S. Treasury, government-agency, and corporate bonds. Mortgage-backed securities are not included in the index. Read more

Management

Ken Volpert has been a manager of this fund since 1994, and Greg Davis was named comanager in 2008. Volpert leads Vanguard's taxable bond group, and Davis' team runs Vanguard's fixed-income index funds, including Short-Term Bond Index VBISX and Total Bond Market Index VBMFX. Read more

Inside Scoop

This fund tracks the Barclays Capital US Long Government/Credit Index. Its long duration (or heightened sensitivity to changes in interest rates) gives it a big boost in falling-rate environments, but it will likely sting when rates are on the rise. Read more

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