Expert insight
Sara Devereux on a new era for fixed income
December 20, 2023
As a Bloomberg commentator observed in this 4-minute video, Vanguard’s low costs give it a major advantage with active fixed income ETFs. Other investment firms have to take on more risk to deliver the same returns after costs. But our global head of fixed income explains that low costs provide other advantages as well.
In the Bloomberg ETF IQ segment, Vanguard’s Sara Devereux said materially lower fees also allow smarter, more discretionary risk-taking. That is an even bigger advantage in what could be a volatile bond market ahead.
Vanguard economists say interest rate cuts are likely in late 2024, but higher real (inflation-adjusted) rates are probably here to stay for the next decade, meaning higher returns over the long run and a new era for fixed income. That doesn’t mean it’s all smooth sailing ahead. But greater volatility also brings greater dispersion in returns, an opportunity for active managers to add value, Devereux said.
Watch the video to hear more from Devereux about today’s market environment.
Related links:
- Why investors benefit from a return to sound money (3-minute video, issued December 2023)
- Vanguard economic and market outlook for 2024: A return to sound money (24-page PDF, issued December 2023)
- Considerations for ETF trading strategies (article, issued December 2023)
Notes:
For more information about Vanguard funds and ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
All investing is subject to risk, including possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Diversification does not ensure a profit or protect against a loss.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Vanguard Information and Insights
Subscribe to Portfolio considerations.
Get Vanguard news, insights, and timely analysis on the market, delivered straight to your inbox.
Vanguard Information and Insights
Thank you for subscribing to Portfolio considerations.
You'll be notified when new content is published, but will only ever receive one email a day from Vanguard Insights.
