Balancing Your Portfolio | Core Taxable Bond Funds

Vanguard’s bond managers don’t get the recognition they deserve. And though Treasury bonds are looking better than they have in a long time, Vanguard’s actively managed corporate-heavy bond funds remain my top picks for the core of your balanced portfolio.

Over the past month or so, I’ve covered a lot of ground on bonds and bonds funds. I hope you’re feeling like a bond market pro at this point. If you are just joining us or want to revisit one of the topics I’ve covered, here are the five installments from my Bonds 101 series:

This week, I’ll apply what we’ve learned to Vanguard’s bond funds. But with so many funds to pick from, I have to split my coverage. This week I’ll give you my take on the investment-grade bond funds—these are the funds that should make up the core of your bond portfolio. Then I’ll discuss the niche and specialty funds before turning to Vanguard’s municipal bond funds.

As you might expect, there are some areas of the bond market I prefer over others and some that I would avoid entirely. In short, I generally prefer corporate bonds to government-backed bonds—though I hold this view less strongly than I used to. Also, I would still stay away from bonds with long maturities, where today’s yields (still) don’t offer sufficient payback for the risks you take in buying them.

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