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Which Vanguard Bond Fund Is Right for You?

In Vanguard’s large stable of bond funds, not all make the cut

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Intermediate-Term Treasury: Sell

VFITXchartExpenses: 0.2%

There’s nothing really wrong with the vanilla Vanguard Intermediate-Term Treasury Fund (VFITX) or its slightly broader-focused ETF cousin, Vanguard Intermediate-Term Government Bond ETF (VGIT). In true Vanguard fashion, it has low costs and delivers what it says it will. Treasury bonds have also consistently provided a place to protect your assets when the stock market has sold off. When conditions are right, intermediate maturity funds can offer you a terrific risk/return combination, generating 70% to 80% of the return you’d get from a long-term fund with only half the interest-rate risk.

However, as with all Treasury-focused funds, the yield here is really low, only 0.8%. That is below the 1.06% yield on Short-Term Investment Grade, and here you have at least twice the interest-rate risk. I don’t see any value in the Treasury market.

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