Vanguard High-Yield Corporate Fund
From Bogleheads
| Company: | Vanguard |
|---|---|
| Fund category: | US Bond |
| Benchmark: | Barclays Capital U.S. Corporate High Yield Bond Index |
| Start date: | 12/27/1978 |
| Expense ratio: | 0.25% |
The Vanguard High-Yield Corporate Fund Invests in lower- and medium-quality corporate bonds (“ junk bonds”). According to the prospectus:
The Fund invests mainly in a diversified group of high-yielding, higher-risk corporate bonds--commonly known as "junk bonds"--with medium- and lower-range credit quality ratings. The Fund invests at least 80% of its assets in corporate bonds that are rated below Baa by Moody's Investors Service, Inc. (Moody's); have an equivalent rating by any other independent bond-rating agency; or, if unrated, are determined to be of comparable quality by the Fund's advisor. The Fund also invests in fixed and floating rate loans of medium- to lower-range credit quality. The Fund may not invest more than 20% of its assets in any of the following, taken as a whole: (i) bonds with credit ratings lower than B or the equivalent, (ii) convertible securities, (iii) preferred stocks, and (iv) fixed and floating rate loans. The loans that the Fund may invest in will be rated Baa or below by Moody's; have an equivalent rating by any other independent bond-rating agency; or, if unrated, are determined to be of comparable quality by the Fund's advisor. The Fund's high-yield bonds and loans mostly have short- and intermediate-term maturities.
The Fund Holdings page indicates that as of 11/30/2008, the fund held 6.3 billion dollars of net assets, and held 249 bonds, in comparison to the fund's benchmark Barclays US Corp High Yield Index, which held 1,481 bonds. The fund's average credit quality, Ba3, was higher than the B1/B2 average quality of the index.
Wellington Management Company, LLP, Boston, Massachusetts, has advised Vanguard High-Yield Corporate Fund since 1978. Michael L. Hong, CFA, Vice President had been the portfolio manager since 2008. Portfolio & Management
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Share Classes
Two share classes are available to individual investors:
- Investor (VWEHX), with an expense ratio (ER) of 0.25% and an initial minimum investment of $3,000, along with a 1% redemption fee on shares sold within one year of purchase.
- Admiral (VWEAX), with an ER of 0.13% and a minimum investment of $100,000, except $50,000 suffices for conversion of an Investor Shares account in existence 10 years, along with a 1% redemption fee on shares sold within one year of purchase.
Advantages
Expenses
The Vanguard High-Yield Corporate Fund's 0.25% and 0.13% share class expense ratios are very cheap. The average expense ratio for High Yield Corporate Bond funds is 1.25%.
Criticisms
Performance
This historical returns webpage provides performance for each of the 15 most recent calendar years. During this 1993-2007 period, the fund had an average annualized return of 6.99%. Its best calendar year result was +19.15% (1995), and its worst was -1.71% (1994). Its tracking error relative to its benchmark varied from -11.77% (2003) to +4.98% (2000).
Vanguard Institutional reports updated three year standard deviations of monthly returns. This measure of return volatility shows the fund had a 11.21% standard deviation compared to the 12.57% standard deviation of the benchmark as of 11/31/08.
History
Inception dates of Vanguard High-Yield Corporate Fund's various share classes are as follows:
- Investor: 12/27/1978
- Admiral: 11/12/2001
The fund's fiscal year ends on 1/31 of each year.
- Fund manager, Earl McEvoy, who had managed the fund since 1982, announces his retirement: 06/30/08
Links
See Also
