Intermediate exposure can give fixed income investors the positioning sweet spot when it comes to duration. Two Vanguard funds to consider are the Vanguard Intermediate-Term Treasury Index Fund ETF Shares (VGIT) and the Vanguard Interim-Term Corporate Bond ETF (VCIT).

Both ETFs consist of bond holdings that don’t exceed more than 10 years in their maturity dates. This keeps investors from getting too far out on the yield curve or, conversely, stuck in a short position as the capital markets eye the Federal Reserve’s next moves on interest rates.

“Investors will be watching to see how the Federal Reserve responds and if it will tighten its monetary policy sooner than expected,” a CNBC report noted. “However, it is Friday’s jobs report from the Labor Department that will be more the focus of investor attention this week.”

Up first is VGIT, which gives investors exposure to safer debt issues with Treasury notes. Per the fund description, VGIT seeks to track the performance of a market-weighted Treasury index with an intermediate-term dollar-weighted average maturity.

The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury 3-10 Year Bond Index. This index includes fixed income securities issued by the U.S. Treasury (not including inflation-protected bonds), with maturities between 3 and 10 years.

VGIT:

  1. Seeks to provide a moderate and sustainable level of current income.
  2. Invests primarily in U.S. Treasury bonds.
  3. Offers moderate interest rate risk, with a dollar-weighted average maturity of 5 to 10 years.

VGIT Chart

Getting Extra Yield with Corporate Bonds

Though credit spreads have been tightening as of late, corporate bonds like VCIT can still give fixed income investors that added dose of yield. The fund seeks to track the performance of a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity.

The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index. This index includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility, and financial companies, with maturities between 5 and 10 years.

VCIT:

  1. Seeks to provide a moderate and sustainable level of current income.
  2. Invests primarily in high-quality (investment-grade) corporate bonds.
  3. Boasts moderate interest rate risk, with a dollar-weighted average maturity of 5 to 10 years.

VCIT Chart

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