|Expense Ratio (net)||0.71%|
|Category||Intermediate Core-Plus Bond|
|Last Cap Gain||0.00|
|Morningstar Risk Rating||Above Average|
|Beta (5Y Monthly)||0.93|
|5y Average Return||N/A|
|Average for Category||N/A|
|Inception Date||May 10, 1987|
It's no secret that actively run mutual funds are unpopular. Meanwhile, the combination of index mutual funds and exchange-traded funds has enjoyed positive net sales. The universe consists of all mutual funds and ETFs, save for money market funds and funds of funds.
That Vanguard might eventually become the largest fund company is not startling. Thirty years ago, when Vanguard wasn't among the 10 largest mutual fund sponsors, it had nonetheless established the industry's strongest brand. The first of this article's three charts compares Vanguard's annual net sales (including exchange-traded funds, but excluding funds-of-funds so as not to double-count transactions) against those of all its rivals combined.
In essence, the Morningstar Medalist rating is about competitive advantages. If we think a fund has enough competitive advantages to outperform its peers, we give it a Morningstar Analyst Rating of Bronze. If it has enough advantages to have a good chance to outperform its benchmark, too, we rate it Silver or Gold.
Tim Harford, a Financial Times columnist, wondered "Why Brilliant People Lose Their Touch." He maintains, at least for mutual funds, that the question cannot be answered. Having looted Harford's topic, I will do likewise with his conclusion. The sample size of consistently successful mutual fund managers is too small, and the factors affecting their funds too large, to permit comfortable conclusions.
What contributed to Vanguard 500 Index's VFIAX 6.4% decline that month? Understanding a bond portfolio's performance drivers, on the other hand, is a much trickier undertaking. For starters, there's no widely available resource where you can look up monthly returns for individual bonds, like you can for stocks.