Fund Times

Manager Exit Triggers Downgrade at Giant Vanguard Fund

Alaina Bompiedi
The following is our latest Fund Analyst Report for Vanguard Short-Term Investment-Grade (VFSUX)

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Vanguard Short-Term Investment Grade provides consistent exposure to short-term corporate and securitized bonds at an attractive price. Yet, with the departure of lead manager and co-head of Vanguard's U.S. corporate bond desk, Greg Nassour, the fund's People Pillar has been downgraded to Neutral from Positive. The fund's Morningstar Analyst Rating has also been lowered to Bronze from Silver.

On April 13, 2018, Vanguard announced that longtime corporate bond skipper Nassour had left the firm. He had managed more than $110 billion in active fixed-income assets and oversaw U.S. corporate bond trading and portfolio management at Vanguard for nearly a decade. Until Vanguard finds a replacement to fill Nassour's seat, Samuel Martinez and Daniel Shaykevich will comanage this fund. Martinez and Shaykevich ascended Vanguard's ranks as assistant portfolio managers but are relatively new as lead managers themselves. Shaykevich has run Vanguard Emerging Markets Bond (VEMBX) since early 2016, while Martinez had comanaged Vanguard Ultra-Short-Term Bond (VUBFX) with Nassour since the beginning of 2017. Vanguard still has ample fixed-income resources supporting this fund, including a deep corporate research team, but the vacancy left by Nassour's departure highlights the need for improved succession planning.

Alaina Bompiedi does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.