Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT)VCIT

Vanguard Intermediate-Term Corporate Bond Index Fund ETF (VCIT)

Profile: VCIT is an ETF that tracks the Bloomberg Barclays U.S. Corporate Intermediate Term Bond Index. This means it invests in a broad basket of investment-grade corporate bonds with maturities between 5 and 10 years. The fund seeks to provide investors with broad exposure to the intermediate-term corporate bond market while minimizing transaction costs.

Objective: VCIT's primary objective is to provide investors with a high level of current income while preserving capital. The fund seeks to achieve this objective by investing in a diversified portfolio of investment-grade corporate bonds.

Issuer: Vanguard is one of the largest and most respected investment management companies in the world, with over $8 trillion in assets under management. The firm is known for its low-cost and index-tracking investment products. VCIT is co-managed by experienced portfolio managers with an average tenure of over 10 years at Vanguard.

Market Share: VCIT is the second-largest intermediate-term corporate bond ETF by assets under management, with approximately $40 billion in assets as of October 26, 2023. This represents a market share of roughly 10% in the sector.

Total Net Assets: As of October 26, 2023, VCIT has $40.04 billion in total net assets.

Moat: VCIT benefits from several competitive advantages:

• Low cost: The fund has an expense ratio of just 0.04%, making it one of the cheapest options in its category.
• Broad diversification: VCIT holds over 2,500 individual bonds, providing investors with exposure to a wide range of issuers and maturities.
• Experienced management team: The fund is managed by a team of experienced portfolio managers with a deep understanding of the fixed-income market.
• Reputation of the issuer: Vanguard is a trusted and respected name in the investment industry, known for its focus on investor interests and low fees.

Financial Performance: VCIT has a strong track record of performance. Over the past 10 years, the fund has returned 4.3% annually, outperforming its benchmark by 0.1%.

Benchmark Comparison: VCIT tracks the Bloomberg Barclays U.S. Corporate Intermediate Term Bond Index. The fund has outperformed the index over the past 1, 3, 5, and 10 years, demonstrating its ability to generate alpha for investors.

Growth Trajectory: The intermediate-term corporate bond market is expected to grow steadily in the coming years, driven by favorable economic conditions and low-interest rate environment. This bodes well for VCIT's future growth prospects.

Liquidity: VCIT is a highly liquid ETF with an average daily trading volume of over 10 million shares. This ensures that investors can easily buy and sell the fund without significantly impacting the price.

Bid-Ask Spread: VCIT has a tight bid-ask spread of 0.01%, indicating low transaction costs for investors.

Market Dynamics: Several factors can affect VCIT's market environment:

• Interest rate: Rising interest rates can negatively impact the price of fixed-income investments, including VCIT.
• Economic growth: A strong economy typically benefits the corporate bond market, as it leads to increased corporate profits and lower default risk.
• Credit quality: The credit quality of the underlying bonds in VCIT can impact the fund's performance.

Competitors: Key competitors to VCIT include iShares Aaa-a Rated Corporate Bond ETF (QLTA), SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB), and Invesco Investment Grade Bond ETF (LQD). VCIT has a larger market share and lower expense ratio compared to most competitors.

Expense Ratio: The expense ratio for VCIT is 0.04%.

Investment Approach and Strategy:

• Strategy: VCIT passively tracks the Bloomberg Barclays U.S. Corporate Intermediate Term Bond Index.
• Composition: The fund holds investment-grade corporate bonds with maturities between 5 and 10 years.

Key Points:

• VCIT provides low-cost, diversified exposure to the intermediate-term corporate bond market.
• The fund has a strong track record of performance and outperforms its benchmark.
• VCIT is highly liquid and has a tight bid-ask spread.

Risks:

• Interest rate risk: Rising interest rates can negatively impact VCIT's price.
• Credit risk: The credit quality of the underlying bonds can impact the fund's performance.
• Market risk: General market conditions and investor sentiment can affect the price of VCIT.

Who Should Consider Investing: VCIT is suitable for investors seeking a low-cost, diversified way to gain exposure to the intermediate-term corporate bond market. The fund is appropriate for investors with a medium-term investment horizon and a moderate risk tolerance.

Fundamental Rating Based on AI: 8.5 out of 10.

VCIT receives a strong AI rating based on its combination of strong financial health, dominant market position, and positive future growth prospects. The fund's low cost, experienced management team, and diversified portfolio provide investors with a solid investment opportunity.

Resources and Disclaimers:

• Vanguard website: https://investor.vanguard.com/investor-resources-education/article/intermediate-term-bond-etf
• Morningstar: https://www.morningstar.com/etfs/arcx/vcit
• Bloomberg: https://www.bloomberg.com/quote/US:VCIT
• Zacks Investment Research: https://www.zacks.com/funds/us/etf/vanguard-intermediate-term-corporate-bond-etf-vcit

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.