Displaying items by tag: fixed income

Vanguard has broadened its fixed-income ETF lineup with the introduction of three new funds, each tailored to meet different investor needs. The Vanguard Government Securities Active ETF (VGVT) is an actively managed strategy focused on U.S. government and agency bonds across various maturities, offering tactical flexibility at a modest 0.10% expense ratio. 

For investors preferring a passive approach, the Vanguard Total Treasury ETF (VTG) delivers broad exposure to the U.S. Treasury market, tracking a major benchmark index with an ultra-low 0.03% fee. Meanwhile, the Vanguard Total Inflation-Protected Securities ETF (VTP) targets those seeking protection from rising prices through TIPS, and carries a 0.05% expense ratio. 

These launches build on Vanguard’s growing fixed income suite, following the recent debut of its Multi-Sector Income Bond ETF (VGMS). 

Finsum: As demand for diversified, cost-effective bond solutions climbs, Vanguard continues to position itself as a go-to provider for both active and index-based fixed income strategies.

Debentures are long-term debt instruments that allow companies and governments to raise capital without pledging specific assets as collateral. These unsecured bonds appeal to investors seeking portfolio diversification and fixed income, though they carry risks tied to the issuer’s creditworthiness. 

While government-issued debentures are generally low-risk due to sovereign backing, corporate debentures rely on the company’s financial health and reputation, making credit ratings an essential consideration. 

There are various types: convertible debentures can later be exchanged for company stock, while nonconvertible ones cannot but typically offer higher interest rates; similarly, secured debentures are backed by company assets, whereas unsecured ones are not, increasing the investment risk but potentially offering higher yields. 

Finsum: While they provide regular income and reduced exposure to market volatility, investors must weigh those benefits against interest rate sensitivity and potential default risk.

If you're considering a core bond holding for your portfolio, the Vanguard Total Bond Market Index Institutional Fund (VBTIX) is a strong contender worth a closer look. Launched in 1995 and managed by Joshua Barrickman since 2013, VBTIX offers broad exposure to the U.S. investment-grade bond market and has grown to more than $43 billion in assets. 

Over the past five years, it delivered an annualized return of -0.94%, but has shown moderate volatility, with a five-year standard deviation of 6.26%—notably lower than the category average of 12%, making it a relatively stable option. With an ultra-low expense ratio of just 0.04% and no sales load, the fund is significantly cheaper than most of its peers, though it does require a high $5 million minimum investment. 

VBTIX's beta of 1 suggests it tracks the bond market closely, while its slightly negative alpha (-0.04) reflects challenges in beating the benchmark on a risk-adjusted basis. 

Finsum: For large institutions or high-net-worth investors seeking cost-efficient, diversified bond exposure with low volatility, VBTIX could be a foundational piece of a fixed-income strategy.

The bond market is undergoing a profound transformation as actively managed fixed-income ETFs gain traction among investors looking for more agile solutions. These funds combine strategic bond selection with the flexibility and transparency of the ETF format, offering a powerful tool for navigating an environment defined by volatility and uncertainty. 

Unlike passive strategies tied to static benchmarks, active managers can explore underfollowed sectors of the bond market, aiming for higher yields and stronger risk management. The ETF Rule of 2019 opened the floodgates for innovation, helping fuel a surge in actively managed ETF launches and inflows, particularly in fixed income. 

Investors are drawn to the structure’s real-time trading, lower embedded costs, and resilience in stressed markets—traits that are increasingly valuable in a dynamic rate environment. 

Finsum: Active fixed-income ETFs are becoming a key component of modern portfolio construction, reshaping how investors engage with the bond market.

A new Goldman Sachs Asset Management survey shows insurers are increasingly focused on annuities as a retirement income solution amid ongoing market volatility. Sixty-four percent of respondents rank annuities among their top three priorities, with many already offering or considering in-plan annuity options. 

Integration into managed accounts and target-date funds is rising, and automatic plan defaults are viewed as key to driving adoption during retirement decumulation. Registered index-linked and guaranteed variable annuities are gaining popularity, and insurers are diversifying underlying indices, with rising interest in AI strategies and international markets. 

AI is also being widely adopted, with 90% of insurers seeing it as vital for improving investor understanding, education, and operational efficiency. 

Finsum: Registered investment advisers have become the leading growth channel for annuity distribution, surpassing independent firms.