3 Vanguard ETFs and Funds Get New Ratings

Susan Dziubinski: Did Morningstar upgrade or downgrade its Medalist Ratings on any what we might call “notable” Vanguard funds last year, and what were those changes?

Daniel Sotiroff: Not a lot. And again, this goes back to what we were talking about with performance. There isn’t a lot that changes, and that’s one of the reasons we like Vanguard. As long-term investments, you shouldn’t see a lot of things that are changing, so not a lot of changes. You might see a Medalist Rating go from Gold to Silver or Silver to Gold or something like that. You might see a notch or two change. Some of that actually might be driven by the model that we’re using in the background to actually assign the Medalist Rating. The pillars for the most part are not changing unless you see a manager change, like we just kind of covered—those instances where maybe we would downgrade something. But for the most part, most stuff has been pretty stable, which is actually great. That’s what you want to see, right? It’s pretty boring, but boring tends to win over the long run. So we’re pretty happy with that.

The things that I think are useful to point out, we talked about Vanguard Core Bond and Core-Plus bonds. These are new ETFs that came out. They were sort of mimicking mutual funds that Vanguard has already had in the mix now for a couple of years. We actually did assign a rating to those at the end of last year. So the Process came out at Above Average, People Pillar came out at Average, and overall those came out at Bronze. That’s Vanguard Core Bond and Core-Plus Bond, both the ETF and mutual fund because they’re following the same strategy.

• Vanguard Core Bond ETF VCRB
• Vanguard Core-Plus Bond ETF VPLS
• Vanguard Core Bond Admiral VCOBX
• Vanguard Core-Plus Bond Admiral VCPAX
• Vanguard Emerging Markets Bond Investor VEMBX

And then the other new one we picked up was Vanguard Emerging Markets Bond, and that came out at an Above Average Process, Above Average People. Also a Bronze-rated fund overall. So emerging-markets bond’s a little bit more competitive, harder to get those Gold and Silver ratings there. But that’s actually pretty good marks, and these are very cheap funds within their categories. So something to look into if you’re interested in any of those sort of fixed-income categories.