Gyroscopic Investing

Why This Vanguard Inflation Fighter Gets a High Rating

https://www.morningstar.com/funds/why-t ... tent=50130



Why This Vanguard Inflation Fighter Gets a High Rating
Vanguard Inflation-Protected Securities’ simple but cheap and effective approach makes it a winner.


Paul Olmsted
Nov 29, 2023



Vanguard Inflation-Protected Securities’ VAIPX straightforward but effective style and low expenses make it appealing.

The fund recently saw a manager change but is still capably managed. When longtime lead manager Gemma Wright-Casparius retired at the end of 2021, Vanguard tapped John Madziyire to succeed her. Madziyire, who has been with Vanguard since 2017 and used to be the head of the firm’s London-based European interest-rate team, has more than two decades of industry experience. That included managing this fund’s global interest-rate stance for the last decade. And Vanguard gives him ample support, including dedicated traders and quantitative analysts.

The fund is a pure play on U.S. Treasury Inflation-Protected Securities. It typically has more than 90% of its assets in TIPS, while rivals tend to keep more in other security types. This no-nonsense fund usually doesn’t stray too far from the Bloomberg US TIPS Index risk characteristics. It limits its active bets to modest duration and yield-curve differences and to trading strategies that exploit temporary market imbalances. The manager will keep small cash and nominal Treasury bond stakes because TIPS can be thinly traded at times.

morningstar shows a ytd of just 1.80% ..a money market did better..it didn’t even keep up with inflation

Curious why you posted this article, Vinny, as it seems to be a plug for this particular fund while expounding on its thoroughly average results. For example:

<< Given its buttoned-up process, the fund’s long-term performance has been near the median of inflation-protected bond peers. Its Admiral shares’ trailing 10-year 1.6% annualized return through October 2023 beat its distinct inflation-protected bond Morningstar Category median peer’s 1.5% gain and was about even with the Bloomberg US TIPS Index’s gain. While performance has been consistent over calendar years, it hasn’t come out ahead of the index since 2014 despite its razor-thin expense ratio. When adjusting for risk, the strategy’s Sharpe ratio (a measure of excess return relative to its standard deviation) was also near the median.>>

My summary would be:

"We strongly recommend this fund despite its uninspiring performance!"

Stated return for TIPS and TIPS funds is usually in real terms, not nominal.

morningstar is in nominal returns always and that fund did awful no matter how you want to try to manipulate it.

it failed to even match a money market