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VMSIX / VMSAX is a newer low-cost (10/2021- ; ER 0.40%/0.30%) multisector bond fund from VG. It had restricted availability so far and had a bad 2022, like other multisector bond funds. The AUM is $22.5 million only and the data on it are sparse. Now that it will be generally available, its AUM may pick up. It would need a longer record for comparison with FADMX, PONAX / PIMIX, etc.
I received an email from Vanguard today to "explore Vanguard's newest bond fund." VMSAX is managed by several members of Vanguard's Fixed Income Group: Daniel Shaykevich, Arvind Narayanan, and Michael Chang. Some other funds managed by these folks are listed below.
VCOBX Daniel Shaykevich and Arvind Narayanan (plus Brian Quigley and Samuel Martinez)
VCPAX Daniel Shaykevich, Arvind Narayanan, and Michael Chang (plus Brian Quigley)
VGCAX Daniel Shaykevich and Arvind Narayanan (plus Samuel Martinez)
- Vanguard doesn't show its annual report on the fund page (You can find it at the SEC here; search for multi-sector)
- On the page linked to by Yogi, the fund is described as " investing in 3 different sector allocations (IG, HY, and EM)"; developed markets aren't mentioned. -- Contrast this with FADMX. Prospectus says: "four general investment categories: high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities.". -- Or PONAX, whose prospectus speaks of investing in debt located "in the United States and non-U.S. countries, including emerging market countries."
FWIW, FADMX's foreign holdings are about 3/4 EM, 1/4 DM, while VMSIX's are split pretty evenly between EM and DM.
Vanguard has a long way to go. I am interested in the Environmental Oportunities fund, but although it has been trading for a month or more, and is up 8% YTD, Vanguard still doesn't list the holdings on it's web site
I like to do more homework on new funds and their competitors long before I invest $ with them. Also have a year or two of track would increase the confidence that their strategy actually works. Multiple sectors funds offer no protection in 2022. So I prefer those with a longer track record, good or not so good.
I am not interested in Vanguard Multisector bond offerings. Vanguard has strengths in some other bond areas, but they have not demonstrated much flexibility in adjusting bond holdings, in the various categories, normally associated with more established multisector bond oef offerings.
After having funds in core, core-plus, HY, EM bond categories, a multisector bond fund is the next step, as noted by @Observant1. I will just watch it for now as I do have Vanguard accounts.
@msf, I see the website showing foreign as 9.1% (total 52.7% investment-grade). May be the promos just highlighted IG, HY and EM.
Now I see where that foreign figure comes from - click on the issuer type "tab" under "Weighted Exposure".
The latest SEC filings (including monthly filings) go only through September. Looking at the annual report (with Sept data), only 75% of the portfolio was domestic, so 25% was foreign. A reallocation of over 15% of the portfolio (from foreign to domestic) in three months - from Sept to Dec - would be quite substantial.
More likely Vanguard is counting only ex-US sovereign debt as foreign debt and counting all other foreign debt (such as Air Canada and Credit Suisse AG) in various other buckets of corporate bonds.
Counting this way, it does look like 100% of Vanguard's "foreign" (i.e. sovereign) debt is EM. In Sept. that was 9.7% of the fund's portfolio (vs. 9.1% in Dec.).
Contrast that with the clear breakdown Fidelity gives for FADMX, where foreign corporate debt still counts as foreign debt:
Foreign Developed-Markets Debt 5.06% Corporate Bonds 2.29% Sovereign Bonds 2.73% Cash & Net Other Assets 0.03%
Emerging-Markets Debt 15.76% Corporate Bonds 4.02% Sovereign Bonds 10.80% Floating-Rate Debt 0.40% Cash & Net Other Assets 0.55%
I generally assume that promo material borrows from legal filings - companies risk suits if they deviate. What the VG prospectus says is:
Under normal circumstances, the Fund will invest at least 80% of its assets in bonds, which include fixed income securities such as corporate bonds; emerging market bonds; and U.S. Treasury obligations and other U.S. government and agency securities
While the wording doesn't say that this list is exhaustive ("bonds which include ...."), developed market debt is conspicuous by its absence. The odd wording is consistent with not considering corporate foreign debt to be foreign debt.
I more I read about this VG fund that more I lean toward Pimco Income, PIMIX. At least you have an experienced team who can execute this multi-sector strategy.
Comments
VMSAX is managed by several members of Vanguard's Fixed Income Group:
Daniel Shaykevich, Arvind Narayanan, and Michael Chang.
Some other funds managed by these folks are listed below.
VCOBX
Daniel Shaykevich and Arvind Narayanan (plus Brian Quigley and Samuel Martinez)
VCPAX
Daniel Shaykevich, Arvind Narayanan, and Michael Chang (plus Brian Quigley)
VGCAX
Daniel Shaykevich and Arvind Narayanan (plus Samuel Martinez)
VEGBX
Daniel Shaykevich (plus Mauro Favini)
A couple of oddities about the Vanguard fund:
- Vanguard doesn't show its annual report on the fund page
(You can find it at the SEC here; search for multi-sector)
- On the page linked to by Yogi, the fund is described as " investing in 3 different sector allocations (IG, HY, and EM)"; developed markets aren't mentioned.
-- Contrast this with FADMX. Prospectus says: "four general investment categories: high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities.".
-- Or PONAX, whose prospectus speaks of investing in debt located "in the United States and non-U.S. countries, including emerging market countries."
FWIW, FADMX's foreign holdings are about 3/4 EM, 1/4 DM, while VMSIX's are split pretty evenly between EM and DM.
After having funds in core, core-plus, HY, EM bond categories, a multisector bond fund is the next step, as noted by @Observant1. I will just watch it for now as I do have Vanguard accounts.
@msf, I see the website showing foreign as 9.1% (total 52.7% investment-grade). May be the promos just highlighted IG, HY and EM.
https://investor.vanguard.com/investment-products/mutual-funds/profile/vmsix#portfolio-composition
The latest SEC filings (including monthly filings) go only through September. Looking at the annual report (with Sept data), only 75% of the portfolio was domestic, so 25% was foreign. A reallocation of over 15% of the portfolio (from foreign to domestic) in three months - from Sept to Dec - would be quite substantial.
More likely Vanguard is counting only ex-US sovereign debt as foreign debt and counting all other foreign debt (such as Air Canada and Credit Suisse AG) in various other buckets of corporate bonds.
Counting this way, it does look like 100% of Vanguard's "foreign" (i.e. sovereign) debt is EM. In Sept. that was 9.7% of the fund's portfolio (vs. 9.1% in Dec.).
Contrast that with the clear breakdown Fidelity gives for FADMX, where foreign corporate debt still counts as foreign debt: I generally assume that promo material borrows from legal filings - companies risk suits if they deviate. What the VG prospectus says is: While the wording doesn't say that this list is exhaustive ("bonds which include ...."), developed market debt is conspicuous by its absence. The odd wording is consistent with not considering corporate foreign debt to be foreign debt.