Is VSGBX a Strong Bond Fund Right Now?

Government Bond - Short fund seekers should consider taking a look at Vanguard Short-Term Federal Investor (VSGBX). VSGBX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.


We note that VSGBX is a Government Bond - Short option, an area packed with various choices. Have securities issued by the United States' federal government in their portfolios. Generally, these are seen as extremely low risk from a default perspective and often regarded as risk-free. Government Bond - Short funds focus on the short end of the curve, which results in lower yields, but less sensitivity to interest rate fluctuations.

History of Fund/Manager

VSGBX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Short-Term Federal Investor made its debut in December of 1987 and VSGBX has managed to accumulate roughly $401.36 million in assets, as of the most recently available information. The fund's current manager, Brian Quigley, has been in charge of the fund since January of 2015.


Investors naturally seek funds with strong performance. VSGBX has a 5-year annualized total return of 0.86% and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of -0.85%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. VSGBX's standard deviation over the past three years is 2.62% compared to the category average of 8.42%. The standard deviation of the fund over the past 5 years is 2.32% compared to the category average of 8.78%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.4, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VSGBX has a negative alpha of -0.51, which measures performance on a risk-adjusted basis.


Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VSGBX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.75%. Looking at the fund from a cost perspective, VSGBX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Vanguard Short-Term Federal Investor ( VSGBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Government Bond - Short area of the mutual fund world, make sure to check out There, you can see more about the ranking process, and dive even deeper into VSGBX too for additional information. If you want to check out our stock reports as well, make sure to go to to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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