When people hear that I work for Vanguard, they often ask me for advice on how they should invest their money. Fortunately for me, the advice is easy to deliver because for nearly 40 years our recommendations have remained simple and consistent: Know your investment goals. Invest with balance and diversification. Minimize costs. And maintain long-term discipline and focus.
In this market environment in particular, investors are increasingly concerned about their bond holdings. The threat of rising interest rates and concerns about bond market liquidity, among other happenings in the normally staid world of fixed income investing, have everyone talking about the fixed income markets.
But making “knee jerk” reactions to news and noise is rarely a wise move.
Are you “convinced” rates are about to rise? Remember that market predictions about yields often miss the mark. As my colleague Joe Davis cautioned recently, remember your goals and don’t take on unnecessary risk.
The threat of rising rates provides an opportunity to remind you of what you can continue to count on from Vanguard: a consistent approach to providing low-cost and high-quality investments that focus on long-term financial success. Whether you’re looking for an index or active strategy, you can expect from us a commitment to rigorous fundamental research, a long-term focus, and stability.
Six months ago, when I was 15 years into my Vanguard tenure, I was given the opportunity to head Vanguard’s $800 billion Fixed Income Group, replacing longtime bond chief Bob Auwaerter, who enjoyed 32 years at Vanguard. I think it’s fair to say that not too many people felt the change in leadership, and that was by design.
Driving Vanguard’s Fixed Income Group is a deep bench of experienced and tenured credit analysts organized under a hub-and-satellite structure, which facilitates information sharing and integration of our highly risk-controlled and systematic approach to investing. At the core of the structure is a seasoned team of fixed income professionals, including Vanguard’s chief economist and senior portfolio management professionals. Adjoining the hub are the satellites—specialists dedicated to different segments of the fixed income market.
Despite changing environments, whether they’re market-related or competitive, our approach remains consistent: clients over profits, enduring insights over predictions, and long-term goals over short-term market moves. That’s a constant that you should continue to expect from us.
All investing is subject to risk, including the possible loss of the money you invest. Investments in bonds are subject to interest rate, credit, and inflation risk.