Fixed-Income Options (Bonds)

Fixed-income (bond) options may ​appeal to investors seeking to diversify their portfolios and reduce risk.

Fixed Income Options Investment Objectives Asset Category Underlying Investments Investment Style/ Characteristics
Vanguard Corporate High Yield Option Show Details Seeks ​to provide a high level of current income High-Yield, High-Risk Corporate Bonds Vanguard High Yield Corporate Fund At least 80% in high-yield corporate bonds and no more than 20% in medium- to lower-range credit-quality bonds and loans Show Details

Vanguard Corporate High Yield Option - Investment Strategy

The ​portfolio invests in Vanguard High Yield Corporate Fund, which invests primarily in a diversified group of high-yielding, higher-risk corporate bonds – commonly known as “junk bonds” – with medium- and lower-range credit-quality ratings. The ​fund invests at least 80% of its assets in corporate bonds that are rated below Baa by Moody’s Investors Service, Inc.; have an equivalent rating by any other independent bond-rating agency; or, if unrated, are determined to be of comparable quality by the Fund’s advisor. The ​fund may not invest more than 20% of its assets in any of the following, taken as a whole: bonds with credit ratings lower than B or the equivalent, convertible securities, preferred stocks, and fixed and floating rate loans of medium- to lower-range credit quality. The loans in which the ​fund may invest will be rated Baa or below by Moody’s; have an equivalent rating by any other bond-rating agency; or if unrated, are determined to be of comparable quality by the ​fund’s advisor. The ​fund’s high yield bonds and loans mostly have short- and intermediate-term maturities.

Dimensional Fund Advisors U.S. Investment Grade Portfolio Show Details Seeks to maximize total returns from the universe of eligible investments Total return is comprised of income and capital appreciation Short-Term Extended Quality Portfolio, Intermediate-Term Extended Quality Portfolio, Short-Term Government Portfolio, and Intermediate Government Portfolio Exposure to broad portfolio of investment grade debt securities of U.S. and non-U.S. corporate and government issuers Show Details

Dimensional Fund Advisors U.S. Investment Grade Portfolio - Investment Strategy

The Investment Grade Portfolio seeks to achieve its investment objective through exposure to a broad portfolio of investment grade debt securities of U.S. and non-U.S. corporate and government issuers. To achieve this exposure, Dimensional Fund Advisors LP generally purchases shares of the Short-Term Extended Quality Portfolio, Intermediate-Term Extended Quality Portfolio, Short-Term Government Portfolio and Intermediate Government Portfolio (Underlying Funds), which are other funds managed by Dimensional. The Investment Grade Portfolio currently intends to allocate its investments among the Underlying Funds in the following manner:

  • 40%-80% in the Short-Term Extended Quality Portfolio and Intermediate-Term Extended Quality Portfolio
  • 20%-60% in the Short-Term Government Portfolio and Intermediate Government Income Portfolio
        
Vanguard Total Bond Market Index Option Show Details Seeks to track the performance of a broad, market-weighted bond index Bonds Vanguard Total Bond Market Index Fund Employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index Show Details

Vanguard Total Bond Market Index Option - Investment Strategy

The ​portfolio invests in Vanguard Total Bond Market Index Fund, which employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. This ​index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities – all with maturities of more than 1 year. The ​fund invests by sampling the ​index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full ​index in terms of key risk factors and other characteristics. All of the ​fund’s investments will be selected through the sampling process, and at least 80% of the ​fund’s assets will be invested in bonds held in the ​index. The ​fund maintains a dollar-weighted average maturity consistent with that of the ​index, which generally ranges between 5 and 10 years.

Vanguard Short-Term Inflation-Protected Bond Index Option Show Details Seeks to track the performance of a benchmark index that measures the investment return of inflation protected public obligations of the U.S. Treasury with remaining maturities of less than five years Short-term bonds Vanguard Short-Term Inflation-Protected Securities Index Fund Employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index Show Details

Vanguard Short-Term Inflation-Protected Bond Index Option - Investment Strategy

The ​portfolio invests in Vanguard Short-Term Inflation-Protected Securities Index Fund, which employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected (TIPS) 0-5 Year Index. The ​index is a market-capitalization-weighted index that includes all inflation protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The ​fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the ​index, holding each security in approximately the same proportion as its weighting in the ​index. The ​fund maintains a dollar-weighted average maturity consistent with that of the target index, which generally does not exceed 3 years.

Note: Vanguard Short-Term Inflation-Protected Securities Index Fund seeks to provide protection from inflation (i.e., a rise in the general price level for goods and services) as measured by the Consumer Price Index. It is possible that the costs of higher education may increase at a rate that exceeds the rate of increase of the Consumer Price Index. There is no guarantee that the Fund will protect investors from the rising costs of higher education.

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