|7 Day Yield||0.08%|
|Avg Maturity (days)||35|
Editor's note: This story was previously published in March 2019. It has since been updated and republished.If you want your portfolio to hold the best Vanguard funds for 2019, you will want a diverse selection of funds that can perform in an uncertain environment of slowing growth.The best funds in 2019 will likely include defensive sector funds and high-quality dividend funds. If you want to diversify with bond funds, buying those that focus on short-term debt may be the best bet, if the Federal Reserve resumes raising rates.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Bank Stocks to Leave in the Vault Balanced funds can also be a good idea in 2019. With the Fed pausing its tightening campaign, investors at first cheered but may soon turn to fears of a recession. This makes for economic and market conditions that will continue to bring volatility and ultimate downside for stocks -- and the potential for bond prices to rise.In summary, diversification will likely beat narrow bets in 2019. With that backdrop, I give you the best Vanguard funds for 2019: Vanguard Wellington (VWELX)Expenses: 0.25%, or $25 for every $10,000 invested Minimum Investment: $3,000When uncertainty and volatility abound, long-term investors are wise to diversify with a well-managed, low-cost balanced fund like Vanguard Wellington (MUTF:VWELX).Source: Shutterstock Although 2018 ended on a negative note for stocks, equities can still have a positive 2019, assuming the current positive GDP forecasts hold. This environment is a good match for a moderate-allocation balanced fund like VWELX, which consists of roughly two-thirds stocks and one-third bonds.Among its stock holdings are high-quality large-caps like Microsoft (NASDAQ:MSFT), Verizon (NYSE:VZ) and JPMorgan Chase (NYSE:JPM). Bonds are a diversified mix with an average duration of 9.4 years. Vanguard Wellesley Income (VWINX)Expenses: 0.23% Minimum Investment: $3,000For investors who want to lean to the conservative side in 2019 or retirees who need income but minimal market risk, Vanguard Wellesley Income (MUTF:VWINX) is among the best in the mutual fund universe.Source: Shutterstock VWINX maintains an allocation of roughly one-third stocks and two-thirds bonds. If stocks enter into a full bear market in 2019, bond prices will likely rise as the Fed continues to pause its tightening campaign and the heavy fixed-income allocation in VWINX will minimize losses. * 7 Stocks to Buy for Monster Growth If you're looking for income, VWINX boasts a 3.4% 30-day SEC yield, which comes from quality dividend stocks like JPM, VZ and Johnson & Johnson (NYSE:JNJ). Vanguard High Dividend Yield Index (VHDYX)Expenses: 0.14% Minimum Investment: $3,000In volatile markets, investors often turn to high-quality stocks of dividend-paying companies, like the ones you'll find in Vanguard High Dividend Yield Index (MUTF:VHDYX).Source: Shutterstock When investors transition from the riskier growth stocks, small-caps and international stocks, they often turn to big U.S. blue-chip stocks that pay dividends. If stocks have a positive 2019, these quality stocks will be among the leaders, and a passively-managed fund full of them can be a smart move.VHDYX tracks the FTSE High Dividend Yield Index, which consists of 400 stocks of U.S. companies that pay larger-than-average dividends like JNJ, JPM and Exxon Mobil (NYSE:XOM). Vanguard Health Care (VGHCX)Expenses: 0.34% Minimum Investment: $3,000In times of uncertainty and market volatility, holding a defensive sector fund, such as Vanguard Health Care (MUTF:VGHCX) can be a smart move for diversifying a portfolio.Source: Shutterstock Although healthcare stock prices won't necessarily climb while those of major market indices fall, they do tend to hold their value better than other sectors during corrections. And if stocks are positive in 2019, your health sector fund can still capture that upside. * 7 Stocks to Sell Amid an Escalating Trade War Another benefit of holding VGHCX in what may be a risk-off environment is that the portfolio is light on the riskier biotechnology stocks. Most of the portfolio consists of managed care and big pharma names like UnitedHealth Group (NYSE:UNH), AstraZeneca (NYSE:AZN) and Bristol-Myers Squibb (NYSE:BMY). Vanguard Ultra-Short-Term Bond (VUBFX)Expenses: 0.20% Minimum Investment: $3,000If the Fed resumes its rate hikes, one of the best bond funds to hold will be Vanguard Ultra-Short-Term Bond (MUTF:VUBFX).Source: Shutterstock An ultra-short-term bond fund like VUBFX is a smart choice for investors who want to minimize interest-rate risk or for those looking for opportunities to get greater yields than money market funds.The reason why short-term bond funds can be smart in a rising-rate environment is that prices for longer maturities fall harder than shorter maturities. This is because bond investors don't want the older, lower-yielding bonds when the newer, higher-yielding bonds are available. Vanguard Inflation-Protected Securities (VIPSX)Expenses: 0.2% Minimum Investment: $3,000Bonds prices tend to fall in inflationary environments but a good TIPS fund like Vanguard Inflation-Protected Securities (MUTF:VIPSX) can perform relatively well in such an environment.Source: Shutterstock Treasury inflation-protected securities, aka TIPS, are Treasury bonds in which the principal value adjusts up or down based on inflation, as measured by the CPI. * 5 Safe Stocks to Buy This Summer While stocks and some bond funds can lose in an inflationary/rising-rate environment, funds like VIPSX can eke out gains. Keep in mind, however, that TIPS funds can still decline in value when rates are rising, although not typically as much as funds that invest in conventional bonds. Vanguard Prime Money Market (VMMXX)Expenses: 0.16% Minimum Investment: $3,000In an environment where neither stocks nor bonds look attractive, investors are wise to allocate a portion of their portfolio to highly liquid money market Vanguard funds like Vanguard Prime Money Market (MUTF:VMMXX).Source: Shutterstock Rising rates are not good for equities or fixed income. However, higher rates do generally increase the yields for money market funds. Therefore, a diversified Vanguard portfolio in 2019 will include VMMXX.VMMXX currently has a compound yield of 2.49% and beat the major indices for both stocks and bonds last year.As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although he holds VWINX in some client accounts. Under no circumstances does this information represent a recommendation to buy or sell securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks That Should Be Worried About a Data Dividend * 5 Cheap ETFs Worth Considering * 7 Cheap Stocks Under $5 That Could Soar Compare Brokers The post 7 Best Vanguard Funds for 2019 appeared first on InvestorPlace.
For more than a decade, income investors have been plagued by paucity wrapped in misery. The bellwether 10-year Treasury note has doled out an average 2.6% interest since 2008. Although the Federal Reserve has nudged its target interest rate range to 2.25% to 2.50%, it has signaled that it's done raising rates for now.Even worse, the yield on the 10-year T-note briefly sank below the yield on the three-month T-bill--an unusual inversion that can sometimes herald a recession and lower yields ahead. The takeaway: Locking your money up for longer periods is rarely worth the negligible increase in yield. What could increase your yield these days? Being a little more adventurous when it comes to credit quality. When you're a bond investor, you're also a lender, and borrowers with questionable credit must pay higher yields. Similarly, stocks with above-average yields probably have some skeletons in their balance sheets. You can ameliorate credit risk--but not eliminate it--through diversification. Invest in a mutual fund, say, rather than a single issue. And invest in several different types of high-yielding investments--for example, investment-grade bonds, preferred stocks and real estate investment trusts--rather than just one category.Despite such caveats, income investing is not as bad as it was in 2015, when it was hard to milk even a penny's interest out of a money market. Now you can get 3.3% or more from no-risk certificates of deposit at a bank. We'll show you 33 ways to find the best yields for the risk you're willing to take, ranging from 2% all the way up to 12%. Just remember that the higher the payout, the greater the potential for some rough waters. SEE ALSO: 20 of Wall Street's Newest Dividend Stocks
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