Vanguard Inflation-Protected Securities Fund Admiral Shares VAIPX

Effective May 11, 2026, John Madziyire stepped down from the role of portfolio manager at Vanguard Inflation-Protected Securities. Madziyire is moving back to the UK, and Vanguard’s internal compliance policies, as well as time zone differences, made it impractical for the firm to retain him on this fund. Brian Quigley, who became a comanager of the strategy on April 16, 2026, will now be the sole manager. While the change is abrupt, it does not alter its current Average People or Above Average Process ratings. Quigley started at Vanguard in 2003 and has covered money markets, Treasuries, and interest rate derivatives. Most recently, he led the group covering the mortgage and agency sectors for Vanguard’s fixed-income effort. While Treasury Inflation-Protected Securities differ in important ways from nominal Treasuries and mortgage-backed securities, his background includes extensive experience across government-related sectors. There are no indications that the fund’s existing investment process will change. It remains embedded in Vanguard’s broader active fixed-income platform, which should help mitigate key-person risk from the transition.

Vanguard Inflation-Protected Securities delivers on this real return strategy through its straightforward, effective approach that focuses almost exclusively on Treasury debt.

At the end of 2021, Vanguard appointed John Madziyire to lead this effort after the fund's longtime manager retired. Madziyire brings two decades of industry experience and joined Vanguard in 2017, where he previously headed the firm's European rates desk in London. He now leads Vanguard's US Treasuries and Treasury Inflation-Protected Securities operations and has successfully managed global rates strategies for more than a decade. While his tenure at the helm here is limited, the fund benefits from the firm’s ample active bond platform resources, including its senior investment committee, dedicated Treasury traders, and quantitative analysts.

The portfolio maintains a focused "pure play" approach by concentrating on US TIPS (typically more than 90% of assets) while avoiding other security types that often appear in competitors' portfolios. The team draws on macro insights from Vanguard's senior investment committee to establish risk guidelines that track closely with the Bloomberg US Treasury Inflation-Protected Index. Madziyire makes active bets through modest duration and yield-curve adjustments and employs trading strategies to capitalize on temporary market imbalances between TIPS, nominal Treasuries, and Consumer Price Index swaps. The recent addition of CPI swaps expands the toolkit and gives him greater flexibility to express his market views. Understanding TIPS liquidity challenges well, Madziyire typically maintains small positions in cash and nominal Treasuries.

The fund’s effectiveness lies in its simplicity. While Madziyire and his team technically can invest up to 20% in non-inflation-linked bonds, tight internal guidelines and a small tracking error budget limit this flexibility; that stands in contrast to many peers who enjoy broader latitude. As of September 2025, the fund's 6.5-year duration matched the index, and yield-curve positioning was neutral to the index; this changed from earlier in 2025 when they anticipated a steepening of the curve. The portfolio had a few percentage points in nominal Treasuries for liquidity.

The fund's disciplined process has produced solid long-term performance near the median for the inflation-protected bond Morningstar Category. Madziyire’s results since he joined are consistent with the fund’s long-term record. Over the trailing 10 years, the I share class’ 2.9% annualized through September 2025 was about the same as its typical peer and slightly less than the benchmark. While results are not particularly compelling, Vanguard has managed to keep up while taking less risk than its peers. The fund has delivered consistent performance across calendar years, and its razor-thin expenses position it well for continued competitive returns.

The strategy's strength lies in its simplicity. The fund concentrates almost exclusively on US TIPS, avoiding non-US inflation-linked debt, corporates, and securitized bonds, which often complicate competitors' portfolios. This approach earns an Above Average Process rating.

This straightforward approach combines macro insights, modest active portfolio adjustments, and data-driven trading strategies to deliver a transparent, predictable experience for investors. Manager John Madziyire and his team work closely with Vanguard's senior investment committee to shape their macro views, establish a longer-term outlook, and set the fund's tracking error target, which they typically maintain within 50 basis points. The strategy closely tracks the Bloomberg US Treasury Inflation-Protected Securities Index, which features only US TIPS, and operates within well-defined parameters versus this benchmark. Manager Join Madziyire and his small supporting team draw on various in-house inflation models to identify relative value opportunities and add value through careful duration and yield-curve positioning. Madziyire also employs a data-driven trading strategy that captures opportunities from temporary market imbalances in both new-issue and secondary markets. In 2024, Vanguard expanded the fund’s toolkit by adding inflation swaps, giving managers additional flexibility to capitalize on disparities between CPI swap breakevens and actual breakevens.

Since TIPS can experience periods of reduced liquidity, the fund maintains ample cash for redemptions by focusing on more liquid issues and keeping small, strategic positions in nominal Treasuries and cash.

The September 2025 portfolio allocated 96.3% of assets to US TIPS, maintaining the high-90% of assets that characterizes this "pure play" real return offering from more flexible rivals. TIPS offer unique inflation protection through their distinctive structure: the principal value adjusts with changes in the Consumer Price Index for All Urban Consumers. The coupon payment—typically lower than that of a comparable nominal Treasury—reflects both the TIPS' fixed coupon rate and the inflation-adjusted principal amount. While deflation can reduce a bond's principal, a protective floor ensures it never falls below par.

Although the prospectus permits up to 20% of assets in non-TIPS investments, the team maintains much stricter internal guidelines to preserve the fund's core strategy and stay within its tracking error budget. Small nominal Treasury positions provide a useful liquidity buffer and typically represent less than 5% of assets; this was about 3.8% as of September 2025.

The fund's duration closely tracks the index, creating a more disciplined approach than some rivals employ. The September 2025 portfolio's 6.5-year duration matched the index’s, and the fund’s yield-curve differences were few. This changed from earlier in the year when Madziyire’s view reflected his anticipation of a steeper yield curve. Notably, higher yields and increased TIPS issuance in shorter-term securities have shortened the index's duration by nearly 1.5 years since 2020.

Over sole portfolio manager John Madziyire’s nearly four years on the fund, he has effectively demonstrated his ability to navigate inflation markets but doesn’t stand apart from rivals, especially given the fund’s limited flexibility; his industry experience and solid supporting cast earn an Average People rating.

Vanguard appointed Madziyire in November 2021 to lead this effort after longtime manager Gemma Wright-Casparius retired. As the firm's head of US Treasuries and TIPS, Madziyire brings more than two decades of industry experience to his first US TIPS fund management role. He joined Vanguard in 2017 at their London office, where he headed the European rates desk and managed global rates and inflation-linked strategies as part of the global rates team. Before Vanguard, he spent over a decade at AXA Investment Managers successfully managing rate strategies. Vanguard's active fixed-income franchise builds on the strength of its senior investment committee (formerly the "Hub"), which brings together expertise in credit research, global rates, municipals, and risk management to provide the macroeconomic insights that shape broad fund positioning.

Madziyire works closely with a dedicated team of two traders and two quantitative analysts who support this strategy. The team relies on effective collaboration, regularly discussing market factors, cash flows, dealer relationships, and opportunities within its data-driven strategies. Moreover, at a time when multiple managers are more often named to a strategy, this fund still has just one. This doesn’t pose key-person risk, though; Vanguard features a deep bench of capable managers who could step in, if necessary.

Madziyire does not currently hold personal investments in the fund.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

Performance is only average versus peers across various time periods, but this is by design. The results reflect a process that doesn’t allow for large active bets and therefore limits the manager’s ability to materially differ from this strategy’s benchmark.

Manager John Madziyire’s nearly four-year record reflects the fund’s long-term results. The I share class’ trailing 10-year 2.9% annualized return through September 2025 was about median versus its distinct inflation-protected bond category peers and slightly lagged the Bloomberg US Treasury Inflation-Protected Securities Index’s return. When adjusting for risk, the strategy’s Sharpe ratio, a measure of excess return relative to its standard deviation, was also near median. The fund has managed to keep pace with peers while running lower volatility, a testament to its process. Over the past 10 calendar years through 2024, the fund has closely tracked the index but came out ahead only twice since 2014 despite its razor-thin expense ratio.

Inflation protection funds are still susceptible to rising long-term yields because of higher inflation; the fund’s stringent duration profile versus its index can make it more vulnerable to rising real yields compared with more flexible peers. For example, inflation expectations rose in 2022, causing long-term real yields to rise. The fund’s 2022 calendar year 11.9% loss was slightly less severe than its median rival’s 12% drop. The fund has held up better in short-term periods of credit stress; during March 2020’s pandemic-driven drawdown, the strategy’s 1.2% drop held up better than 80% of peers, many of whom keep small non-Treasury stakes.

Vanguard Inflation-Protected Secs Adm's Prospectus Adjusted Expense Ratio is 0.1% per year. It places it in the cheapest quintile of the Morningstar US Fund Inflation-Protected Bond Category, where the median fee is 0.58% per year. This cost positioning translates into a Medalist Rating Price Score of 2.14, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.