|Expense Ratio (net)||0.20%|
|Last Cap Gain||0.00|
|Morningstar Risk Rating||Average|
|Beta (3Y Monthly)||0.36|
|5y Average Return||N/A|
|Average for Category||N/A|
|Inception Date||Oct 29, 1982|
Unlike other mutual fund companies, Vanguard is owned by the funds themselves, which helps its management focus better on shareholder interests.
Investors in even the best bond funds that Wall Street has to offer might be in for a difficult 2020.Much of the bond market, in my view, is in a bubble - just as tech stocks were in 1999. And bubbles always end badly.Consider that in November 2019, $12.5 trillion was invested globally in bonds that have negative yields. That's down from a peak of $17 trillion in August, but that's still an absurd amount of money invested globally in bonds that have negative yields. That means investors are paying interest to a borrower to lend the borrower money -- which is just as crazy as it sounds. Carl Weinberg, chief economist at High Frequency Economics, notes that a bond with a negative yield is worth less than "a bag of dirt in your basement."What's more, at various points recently, long-term bonds have been paying lower yields to investors than short-term bonds - a phenomenon known as a negative yield curve, which is typically predictive of a recession sometime down the road.The lesson is to keep bond maturities short. With bond yields so low, they almost have to rise unless we're entering a period of serious deflation, which seems a remote possibility. And when bond yields rise, total returns on shorter-duration funds will sparkle compared to likely losses on long-term bond funds.Here are my seven best bond funds to buy for 2020, from least to most risky. Bonds are primarily intended to add stability and a bit of income to your portfolio - not to take big risks in search of huge profits. For bonds, 2020 likely will be a year to be concerned not so much with return on capital but with return of capital. SEE ALSO: The 30 Best Mutual Funds in 401(k) Retirement Plans
Income investing is supposed to be like watching a predictable movie that you've seen a dozen times before. But lately, it has been full of plot twists. Over the past few years, most income investors settled back with their popcorn for a long period of rising interest rates, believing the Federal Reserve would slowly but surely hike rates back to more normal levels. For bond investors, that would mean some temporary pain--when rates rise, bond prices fall--but it would also bring the welcome relief of higher yields. Then the Fed ripped up the script. After three years of fairly steady rate increases, the Fed left rates unchanged early this year and signaled that it's unlikely to raise rates at all in 2019. Instead of bracing for further rate increases, many bond traders started betting that the Fed would even cut rates this year. (Kiplinger expects the Fed to stand pat.) The shifting expectations drove new money into bonds of all stripes. The Bloomberg Barclays U.S. Aggregate Bond Index gained nearly 3% in the first quarter, while junk bonds rallied more than 7%. "The theme was, 'Look out, rates are rising. You'll get killed in bond funds,' " says Warren Pierson, senior portfolio manager at Baird Advisors. "That hasn't happened at all."Retirees who depend on high-quality bonds for income may be heaving a sigh of relief, but this movie isn't over yet. The bond rally at the start of the year left few fixed-income bargains, and the Fed's interest-rate pause means that rates on cash and near-cash holdings will remain stuck at relatively low levels. The shift in Fed policy should also prompt investors to reevaluate holdings, such as floating-rate funds, that they may have scooped up for protection against rising rates. Income investors turning to dividend-paying stocks, meanwhile, may find that good values are scarce in a market that has recently touched record highs.So where should retirees turn for investment income? Terri Spath, chief investment officer at Sierra Investment Management, suggests focusing on the three "D"s: diversification, defense and distribution. Yes, you want a decent yield, but don't rely on any one asset class for income--and use particular caution when approaching investments with juicy yields. "This is not a time when investors want to be heroic or take on excessive amounts of risk," Pierson says. But this isn't a time to hide out in cash, either. Retirees need to pay the bills and ideally earn more than the 2% inflation rate. Fortunately, income investors willing to cast a wide net can find some good buys in everything from short-term bonds to dividend-paying stocks and preferred securities. Here are six ways to find market-beating yields of 2.5% to 6%, while keeping risk in check. SEE ALSO: 101 Best Dividend Stocks to Buy for 2019 and Beyond
When most investors think about Vanguard funds, they do so from a point of indexing. After all, John Bogle and Vanguard created the concept of indexing and showed the world it can lead to overall portfolio outperformance and better outcomes. So it's no wonder why now billions of dollars sit in funds like the Vanguard S&P 500 ETF (NYSEARCA:VOO) and Vanguard funds are synonymous with indexing.But the asset manager is more than a one-trick index fund pony. Much more.The truth is, the firm runs one heck of an active shop as well. There are plenty of active Vanguard funds that offer market-beating performance, high long-term returns and the low costs that made Vanguard famous. And it's because of that low-cost mantra that many of the firm's actively managed mutual funds can and do outperform their benchmarks. For investors, strictly focusing on the firm's passive side could be a big mistake.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Great Stocks to Buy on Dips But with over 190 different investment choices -- both passive and active -- how do you know which Vanguard funds are right for you? Luckily, we've done some of the leg work for you here at InvestorPlace. With that, here are five active Vanguard funds worth buying today. Vanguard PRIMECAP Fund Admiral Shares (VPMAX)Source: Shutterstock Expense Ratio: 0.31% annually, or $31 per $10,000 invested. Minimum Investment: NoneWhen it comes to active Vanguard funds, the Vanguard PRIMECAP Fund Admiral Shares (MUTF:VPMAX) could be the crown jewel under its umbrella. VPMAX has long been one of the best-performing active stock funds in history, and that performance continues to this day. Despite its nearly $64 billion in assets, the fund is still able to generate high returns. That's due to its strategy.Managers at VPMAX focus on large- and mid-cap stocks that trading at bargain prices, but have a specific growth catalyst that could propel them forward. This includes everything from buyout potential to new products or restructuring efforts. Moreover, the fund tends to hold these stocks for the long haul, with an average of 12 years. Finally, those $64 billion in assets tend to be very concentrated. Often the 10 holdings represent 30%-40% of the fund's total assets. Currently, VPMAX only holds 140 total stocks, with Google (NASDAQ:GOOG, NASDAQ:GOOGL) and FedEx (NYSE:FDX) among its top holdings.The proof for this active Vanguard fund is in the pudding. VPMAX has managed to return more than 17% annually over the last decade. This beats the S&P 500 by a full two percentage points every year. Since its inception in the 1980s, VPMAX has managed to post a nearly 11% annual return.And while VPMAX is closed to new investors directly, the fund can still be bought via many 401k plans. If it is available to them, investors should jump on the opportunity. Expenses are a dirt-cheap 0.31%, or $31 per $10,000 invested. Vanguard International Growth (VWIGX)Source: Shutterstock Expense Ratio: 0.45% Minimum Investment: $3,000International markets are often fertile ground for active stock pickers as less attention is paid to them by big Wall Street analysts. And Vanguard has been quite successful in this area. The Vanguard International Growth (MUTF:VWIGX) is the prime example.Run by two of the top international global investing groups -- Baillie Gifford and Schroder's -- VWIGX combs both developed and emerging markets for growth-styled stocks. Baillie Gifford, which controls about 60% of assets, tends to look for faster-growing companies, while Schroder's will look for those growth stocks trading at bargain prices. The managers are also allowed to move up and down the entire market-cap ladder to find selections.This strategy has allowed VWIGX to crush the competition. You get both growth and some value tied to it. The fund has outperformed both developed- and emerging-market international indexes as well as other mutual funds in its category. Moreover, the fund has held up better in the recent market wonkiness than its peers as well. However, VWIGX has provided a more volatile ride, due in part to larger weightings in emerging markets. * 7 Strong Buy Stocks That Tick All the Boxes But for investors with a long-term timeline, the extra volatility is worth it. Over the last decade, the fund has managed to turn a $100,000 investment into nearly $300,000. Not too shabby for an active fund. Vanguard Short-Term Investment-Grade (VFSTX)Source: Shutterstock Expense Ratio: 0.2% Minimum Investment: $3,000Some of the best active Vanguard funds can be found on the fixed-income side. The firm's active bond offerings have long allowed investors to get a better yield and returns than many of its indexed products like the Vanguard Total Bond Market ETF (NASDAQ:BND).A great example is the Vanguard Short-Term Investment-Grade Fund Investor Shares (MUTF:VFSTX).The fund focuses its attention on short-term and intermediate-term investment-grade fixed income securities. That can include Treasury bonds and corporate securities. What makes it a better fund than its strictly indexed sister -- the Vanguard Short-Term Bond Index Fund (MUTF:VBIRX) -- is that VFSTX holds a slightly higher concentration of corporate bonds versus Treasuries. This allows the active fund to produce a slightly high yield -- currently 2.7% for the 30-day SEC yield and 3% for the distribution yield. However, the focus on corporate debt doesn't mean that there is a ton of added risk to the fund.For investors looking for a cash alternative, this is great news, especially, if you are willing to take on just a tad more risk.The results of this strategy have been positive. VFSTX has been able to generate a nearly 6% return since its inception in the 1980s and has been pretty steadfast over that time. And with an expense ratio of just 0.2%, VFSTX is as cheap as many of Vanguard index funds. Vanguard Health Care Fund Investor Shares (VGHCX)Source: Shutterstock Expense Ratio: 0.38% Minimum Investment: $3,000Hidden in the garden of the active Vanguard funds happen to be some of the best sector-specific mutual fund options on the whole planet. That includes the top-rated, stellar performer -- the Vanguard Health Care Fund Investor Shares (MUTF:VGHCX).Since 2012, manager Jean Hynes has successfully guided VGHCX on its path and has continued its legacy of great performance. Healthcare continues to be a diverse sector, and Hynes has focused her search for great stocks on several key trends in the industry. This includes our overall aging population, delivery of healthcare, growth in emerging markets and the revolution in biology/genomics. This has created a much more global portfolio than previous allocations for VGHCX. Hynes also runs a pretty concentrated portfolio of her best ideas. Currently, the fund holds just 88 stocks. * 7 Energy Stocks to Buy to Light Up Your Portfolio However, this hasn't dampened the performance of this active Vanguard fund. VGHCX has managed to crush its benchmark over the last decade by more than 3 percentage points per year, and that performance has come in good and bad markets. With healthcare getting a tad rocky lately, Hynes' expertise should help guide the fund through any malaise.All in all, when it comes to active Vanguard funds, VGHCX is simply one of the best. Vanguard STAR Fund (VGSTX)Source: Shutterstock Expense Ratio: 0.31% Minimum Investment: NoneOne of Vanguard's missions is helping investors of any size get started on the journey to saving. And while many Vanguard funds require $3,000 or even $10,000 initial investments, the active Vanguard STAR Fund (MUTF:VGSTX) features a low investment minimum of $0. And investors get a lot for that little starting price.VGSTX is a balanced fund and holds stocks, bonds and short-term investments designed to provide long-term growth of capital. Currently at a 70/20/10 mix. In the end, it's designed to be a one-stop shop for investors. And given its low initial investments, the fund makes an ideal way for savers just starting out or those looking to provide gifts to children/grandchildren.But don't let the goofy name or low minimums fool you. The STAR fund is really a star in Vanguard's active line-up.Since its inception in 1985, VGSTX has managed to produce a 9.85% annual total return. Over the last decade, it's managed to produce a 10.88% annual total return. That's not too shabby for a fund holding stocks, bonds, and other assets. It shows that Vanguard still takes the fund seriously. Helping guide that overall return is its low expense ratio -- currently at 0.31%. That's about half of what you'll pay for similar funds at other active shops.For those looking for a no-nonsense total portfolio, VGSTX is a serious contender among active Vanguard funds.At the time of writing, author Aaron Levitt did not hold a position in any fund mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dangerous Dividend Stocks to Stay Far Away From * 7 Tips for New Investors Young and Old * 10 Great Stocks to Buy on Dips Compare Brokers The post 5 Active Vanguard Funds That You Have to Own appeared first on InvestorPlace.
If you've built a solid portfolio of funds, the last thing you want to do is tear it apart and build a new one simply because the stock market is doing one of its periodic swan dives. But that doesn't mean you shouldn't tinker around the edges in a market that acts like it wants to go down. You might cut, say, 5% of your stock allocation and put the proceeds into a low-risk bond fund. If you think your investments need more rearranging, you might take your most volatile fund and replace it with a lower-risk offering. Where to look for a replacement? Vanguard funds include a fistful of first-rate defensive offerings that, while they'll still likely lose money in a bear market, they should still hold up better than most other funds. Here are the six best Vanguard funds to own in a bear market. Note: Some of these funds are only available directly from the low-cost provider. At the same time, if you use a discount broker, you may be able to buy cheaper Admiral shares without meeting Vanguard's minimum, which typically ranges from $10,000 to $50,000 depending on the fund. ### SEE ALSO: The 25 Best Low-Fee Mutual Funds You Can Buy
Bond funds are for your "safe" money. They give your portfolio ballast - and they're a ready source of cash when you spot opportunities in the stock market. Just keep the very long-term in mind and don't get greedy with bonds in 2019. Almost every flavor of bond and bond fund lost at least a little money last year, and the same could happen this year. For instance: Even the best long-term and even intermediate-term bonds and bond funds will likely do well only if there's a dramatic slowdown in the economy, which would push down bond yields and boost their prices. (Bond yields and prices move opposite one another). Lower-credit-quality bonds, meanwhile, will only earn big profits if the economy, which seems likely to grow at a slower pace this year, instead continues to grow as rapidly as it did in 2018. Neither event looks likely. But while bond funds may not make you rich, they'll likely at least keep up with inflation, and they almost certainly won't make you poor. They're a safety play in a Wall Street environment that makes safety a necessity. With that in mind, here are my favorite bond funds for retirement savers in 2019. The focus? Low-risk bond funds that invest mainly in short-term, high-quality bonds. The goal? Protection. ### SEE ALSO: The 27 Best Mutual Funds in 401(k) Retirement Plans