Vanguard Long-Term Corporate Bond ETF

VCLT

Market cap $7.49B

Elected officials' continued debate about the budget on Capitol Hill could spur additional interest rate cuts. Given these current market forces, fixed income investors may want to reposition their portfolios to attain corporate bond exposure.

With an eye on mitigating rate risk, short-term bond funds have been the apple of fixed income investors' eyes the past few years. But with rates falling, those same eyes may be wandering and looking at long-term bond ETFs.

Investors seeking a Goldilocks option to balance yield and rate risk may want to consider intermediate bonds. One fund that's coming off a strong second quarter and worthy of consideration is the Vanguard Interim-Term Corporate Bond ETF (VCIT).

The bond market looks increasingly focused on slowing economic growth vs. tariff inflation.

VCLT offers diversified, investment-grade, long-term corporate bond exposure with a 5.7% yield but carries significant duration risk due to rate sensitivity. Despite low fees and high liquidity, the Fund has underperformed peer ETFs on a total return basis, making it a less optimal choice. Current inflation trends and delayed Fed rate cuts increase the risk of adverse returns for long-dated bonds like those held in Vanguard Long-Term Corporate Bond Index Fund ETF Shares.

How high is ultrahigh when it comes to yields? You can probably find different answers to this question.

Exchange-traded funds (ETFs) are sort of like ice cream: There's a flavor that should appeal to every person.

In recent days, a new headwind is weighing on fixed income securities: a US government budget bill, which is expected to significantly raise an already hefty federal deficit in the years ahead. Long-term Treasuries are the biggest losers post-Liberation Day, based on a set of ETFs through yesterday's close (May 21).

There's still a lot of uncertainty in the bond markets, especially the corporate variety. But with tariff negotiations underway, especially with China, the pause could present investors with an opportune time to snatch up corporate bonds.

Rising tariff turmoil has sparked a run from credit-sensitive instruments, with escalating trade tensions threatening economic stability. Wednesday's GDP print stoked recessionary fears when it showed the U.S. economy contracted for the first time since early 2022.