Vanguard Long-Term Corporate Bond Index Fund
Loading news...
VCLT charges a much lower expense ratio and offers a higher yield than TLT. VCLT has experienced smaller drawdowns and lower volatility, but its holdings are concentrated in corporate rather than Treasury bonds.
ETFs can provide diversification because they provide exposure to a basket of stocks. But with a high-yield ETF, it's essential to understand what it owns and its level of risk.
Corporate bonds typically appeal to those seeking higher yield potential relative to safer government debt, but current market uncertainty may keep fixed income investors from making the move. However, strong fundamentals are also underpinning corporate bonds, which only add to their appeal despite ongoing risks.
The Vanguard Long-Term Corporate Bond ETF and iShares iBoxx Investment Grade Corporate Bond ETF both offer exposure to investment-grade corporate bonds. VCLT offers lower costs and a higher yield, making it more appealing to income-focused investors.
After the Fed just cut rates a second time this year, a steeper yield curve could force bond investors to reconsider the long end again. That said, they can play the long game with ETF options from Vanguard that focus on maximizing yield by investing in bonds with maturity dates extending past 10 years.
Envestnet Asset Management Inc. lessened its stake in Vanguard Long-Term Corporate Bond ETF (NASDAQ: VCLT) by 13.2% during the second quarter, according to its most recent filing with the Securities and Exchange Commission. The firm owned 336,965 shares of the exchange traded fund's stock after selling 51,040 shares during the quarter. Envestnet Asset
Vanguard Long-Term Corporate Bond Index Fund ETF Shares offers diversified exposure to long-term U.S. corporate bonds, tracking its benchmark passively. VCLT's returns depend on monthly bond coupons and price changes driven by interest rate and credit spread movements. Current macroeconomic indicators suggest a neutral environment for VCLT, with stable long-term rates and reasonable credit spreads.
Elected officials' continued debate about the budget on Capitol Hill could spur additional interest rate cuts. Given these current market forces, fixed income investors may want to reposition their portfolios to attain corporate bond exposure.
Investors seeking a Goldilocks option to balance yield and rate risk may want to consider intermediate bonds. One fund that's coming off a strong second quarter and worthy of consideration is the Vanguard Interim-Term Corporate Bond ETF (VCIT).
VCLT offers diversified, investment-grade, long-term corporate bond exposure with a 5.7% yield but carries significant duration risk due to rate sensitivity. Despite low fees and high liquidity, the Fund has underperformed peer ETFs on a total return basis, making it a less optimal choice. Current inflation trends and delayed Fed rate cuts increase the risk of adverse returns for long-dated bonds like those held in Vanguard Long-Term Corporate Bond Index Fund ETF Shares.
How high is ultrahigh when it comes to yields? You can probably find different answers to this question.
Exchange-traded funds (ETFs) are sort of like ice cream: There's a flavor that should appeal to every person.
In recent days, a new headwind is weighing on fixed income securities: a US government budget bill, which is expected to significantly raise an already hefty federal deficit in the years ahead. Long-term Treasuries are the biggest losers post-Liberation Day, based on a set of ETFs through yesterday's close (May 21).
There's still a lot of uncertainty in the bond markets, especially the corporate variety. But with tariff negotiations underway, especially with China, the pause could present investors with an opportune time to snatch up corporate bonds.
Rising tariff turmoil has sparked a run from credit-sensitive instruments, with escalating trade tensions threatening economic stability. Wednesday's GDP print stoked recessionary fears when it showed the U.S. economy contracted for the first time since early 2022.
Market uncertainty is also spilling over into bonds. But fixed income investors can opt for corporate bonds if they're looking to maximize yield opportunities without sacrificing too much credit risk.
Put your money to work, sit back, and reap the rewards. These are the primary steps involved in generating passive income.
Research includes back-testing portfolios with 100% fixed income in LTCB, LTT, and a 50/50 blend, showing LTCB has the best returns and risk-adjusted returns. Adding 10% equity to fixed income portfolios reveals LTT's advantage, with 10/90 Equity/LTT yielding the highest return and risk-adjusted return. The 10/90 Equity/LTT portfolio also experiences the smallest maximum drawdown, highlighting its superior performance in a mixed asset strategy.
Quite a few stocks gained momentum in the weeks preceding Donald Trump's second inauguration as U.S. president. It was a different story for most bonds, though.