Expert insight
Sara Devereux on the future of fixed income
February 12, 2026
In a recent episode of Morningstar’s The Long View podcast, Sara Devereux, Vanguard’s global head of fixed income, looks back on the bond markets and forward to what she believes to be a new era for fixed income driven by higher yields, structural shifts in demand, and technology-driven improvements in portfolio construction and execution.
In the wide-ranging interview, Devereux touched on a number of topics, including:
- How higher starting yields led to solid returns in 2025, and how bonds will continue to play the role of “ballast” for balanced portfolios.
- Technology’s ongoing transformation of the bond market, influencing portfolio construction and the speed of execution.
- How strong fundamentals but tight spreads across corporate credit make security selection, credit quality discipline, and maintaining dry powder even more essential.
- Vanguard’s disciplined “alpha waterfall” process for active managers that prioritizes the most repeatable and reliable sources of return.
- The opportunities and risks in the growing private credit market.
Listen to the full podcast.
Notes:
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High-yield bonds generally have medium- and lower-range credit quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit quality ratings.
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Savings due to the reduction in expense ratios were calculated on a share class basis for each fund for which there is a Vanguard-initiated reduction. AUM as of November 30, 2024 for each relevant share class was multiplied by 2024 expense ratios. The same AUM data was then multiplied by 2025 reduced expense ratios. The difference was added across funds to determine the total estimated savings to Vanguard investors holding those funds in both 2024 and 2025.
The $2.8 trillion in assets under management are for Vanguard bond funds and money market funds as of December 31, 2025.
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