Your Guide to Active Fixed Income
Are you wondering about new ways to do more with your money? Hot dog, because we’re here to give you the FYI on active fixed income funds (or active bond funds) – and why you should consider adding them to your portfolio.
If this all sounds new to you, active portfolio management means having a team of experts making strategic investment choices for you. This is different from passive investing (obv) where you typically buy all of the stocks or bonds in the index that your fund tracks.
With that in mind, with our partners at Vanguard, ~bind~ on the three things that place the A + in active bond funds.
It’s all a balancing act
Have you seen business executives show off their luxury yachts this summer? Think of bonds like the boat’s ballast for a balanced portfolio, straightening the vessel in rough waters.
Active bond funds are great portfolio components because they can diversify portfolios in times of market uncertainty.
This diversification helps portfolios smoothly weather any volatility that may arise. During market crises, bond and fixed income yields may be less affected and yield positive returns under volatile market conditions.
Money doesn’t grow on trees – we’ve verified this on several occasions – but with the careful care of a portfolio manager, you could potentially increase your portfolio’s performance.
When managing an active fund, the portfolio manager uses their research and expertise to manually select stocks or bonds for the fund. Their strategic selection of funds can help your investments flourish in the market.
But one last thing here. Active bond funds may have more taxable returns than other funds. This is because they are traded more frequently and these taxable returns might be suitable for tax-advantaged accounts like an IRA.
Patience is always a virtue
Like waiting for your lunch to go on weekdays, returns can sometimes take a while. The low costs and fees of active bond funds can therefore help you keep more of your initial investment while you wait.
Look for active bond funds that have low expense ratios, like Vanguard’s FWIW. So whether you’re using a financial advisor or investing your money yourself, low fees can help ensure your financial success.
We know we’re really convincing, and you can’t wait to step into the exciting world of active fixed income. These tips are just the start, so check out Vanguard Active Bond Funds to start making smarter money moves.
What is their secret ? 92% of Vanguard’s active bond funds have outperformed their peers over the past five years. In what way precisely? Vanguard is owned by the people who invest in their funds (that is, you), not the shareholders. And that’s just a fancy fact among a sea of awe-inspiring statistics. Learn more about Vanguard’s active fixed income offerings.