Vanguard Long-Term Investment-GradeVWESX

Morningstar Rating

Fund Research and Analysis

by Michael Herbst

Vanguard Long-Term Investment-Grade is an all-weather winner.

Long-term bond funds shouldering more credit risk than this one may deliver knockout short-term returns or appear to offer more attractive yields. Even so, this fund's cautious strategy and management have proven their mettle lately. Read more

Kudos

Solid long-term returns and competitive yields.

Experienced management.

Rock-bottom expenses. Read more

Risks

The fund's duration is typically longer than most of its peers', so it tends to lag when interest rates rise.

The portfolio's investment grade emphasis leaves it more sensitive to changes in interest rates and courts above-average volatility.

Lacks broad bond-market diversification. Read more

Strategy

The fund invests mainly in high-quality corporate bonds, but it may also invest as much as 20% of assets in Treasuries and other government securities. Starting in mid-2001, the fund could invest as much as 5% of assets in high-yield debt, but it has barely endeavored to do so yet. Read more

Management

Veteran manager Earl McEvoy of esteemed subadvisor Wellington Management Company, who managed this fund since March 1994, retired at the end of June 2008. Longtime Wellington manager Lucius T. Hill III, who became comanager in February 2008, has taken over management here. Read more

Inside Scoop

This fund is under relatively new management, yet skipper Lucius Hill is employing the same time-tested, buttoned-up style as his predecessor. Formidable research resources, a cautious approach to credit risk, and a low 0. Read more

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