Vanguard Short-Term Bond Index Fund (VBISX) Investor Shares

This next fund review is another Vanguard index mutual fund. This index bond fund is Vanguard Short-Term Bond Index fund. This short term bond fund has low expense fee and best rated fund by Morningstar. More review is below.

Vanguard Short-Term Bond Index Investor (Ticker: VBISX)

This Vanguard Short Term Bond Index fund’s objective is to seek to track the performance of a market-weighted bond index with a short-term dollar-weighted average maturity. This Vanguard fund uses passive management approach to track the performance of the Barclays Capital U.S. 1-5 Year Government/ Credit Float Adjusted Index. This fund invests >80% of assets in bonds held in the index. The fund maintains a dollar-weighted average maturity consistent with that of the index, which generally less than 3 years.

Fund Details
Vanguard Short Term Bond Index
  • Fund Inception Date: March 1, 1994
  • Ticker Symbol: VBISX
  • CUSIP: 921937207
  • Beta (3yr): 0.47
  • Rank in category (YTD): 11%
  • Category: Short-Term Bond
  • Distribution: 1.89%
  • Capital Gains: 0%
  • Expense Ratio: 0.22%  
  • Net Assets: $ 23.22 billion
  • Number of Years Up: 16 years
  • Number of Years Down: 0 years
  • Average Duration: 2.6 years
  • Average Maturity: 2.7 years
  • Annual Turnover Rate: 60.0%
Updated on 11/12/2011

This Vanguard Short-Term Bond Index Fund has been managed by Gregory Davis since January 2005. The fund’s inception date was March 1, 1994. The total net assets of this fund are $23.22 billion. The fund dividend yield is 1.89%. The annual expense ratio of this VBISX fund is 0.22% as of December 2010. This figure is 75% lower than the average expense ratio of other funds that have similar holdings.

This VBISX fund has 4-stars rating from Morningstar. It has always contributed with positive return since its inception 16 years ago. The highest return so far was achieved in 2001 with 8.88% and the lowest wa achieved in 2005 with 1.31%. The YTD return is 2.55%. Based on load adjusted return, this best rated taxable bond fund has returned 1.91% over the past year and 4.00% over the past decade. The average maturity is 2.7 years and the average duration is 2.6 years. The yield to maturity is 1.0%.

Investor will need a minimum of $3,000 to open a brokerage account in this Vanguard fund with the minimum subsequent investment of $100. There is no management fee for investing in this fund. This is a no-load fund, meaning there is no front-end sales load fee or deferred sales load fee. This fund is available for purchase from 84 brokerages; include JP Morgan, T Rowe Price, Td Ameritrade Inc, E Trade Financial, Firstrade, Schwab Retail, Ameriprise Brokerage, Principal Advantage, etc. The best way to invest in this fund is by buying through Vanguard Brokerage Services (VBS).The other class of this fund is the Admiral Class (VBIRX).

As of September 2011, this top bond fund has a total of 1354 bonds. Spliced Barclays Capital U.S. 1-5 Year Government/ Credit Float Adjusted Index and Barclays Capital U.S. Aggregate Bond Index are the benchmarks of this Vanguard fund. The distribution by issuers is as follow Treasury/ Agency (70.0%), Industrial (10.7%), Finance (9.8%), Foreign (7.6%), Utilities (1.5%), other (0.3%), and Government Mortgage-Backed (0.1%).

The primary risks for investing in this fund are: Interest Rate Risk, Income Risk, Credit Risk, and Index Sampling Risk.

Disclosure: No Position

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