Vanguard Extended Duration Treasury Index Fund Institutional Shares VEDTX

Vanguard Extended Duration Trs Idx Instl holds a quantitatively derived Bronze Morningstar Medalist Rating. The rating reflects that it has scored better than the norm on factors Morningstar research associates with future outperformance relative to category peers.

People: Above Average

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard Total Bond Market ETF (SecID: FOUSA06C1Y).

Process: Average

The fund is well- or fairly diversified and only partially represents the US Fund Long Government category's opportunity set. Passive investing has historically performed well in the US Fund Long Government category. Over the long term, passive funds have often outpaced their actively managed counterparts.

Performance (in US Dollar)

Over the past 12 months, Vanguard Extended Duration Trs Idx Instl share class returned -2.4%, underperforming both its category index, the Bloomberg US Government Long TR USD Index (0.9%), and its Morningstar category peers (0.5%). Over 10 years, the fund returned -3% per year, below the index (-0.8% per year) and Morningstar Category average (-1% per year).

Price

Vanguard Extended Duration Trs Idx Instl's Prospectus Adjusted Expense Ratio is 0.05% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Long Government Category, where the median fee is 0.18% per year. This cost positioning translates into a Medalist Rating Price Score of 1.45, 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.

Vanguard Extended Duration Trs Idx Instl is assigned an Average Process rating. Morningstar's algorithmically assigned Passive Process ratings are first derived by comparing the historical efficacy of passive investments relative to active peers. For fixed-income funds, this category-level score is then adjusted based on the fund's characteristics, including its ability to diversify risk and represent the category's opportunity set. To maintain consistency and account for all available data, raw scores are averaged across funds tracking the same benchmark.

Representativeness

The fund only partially represents the Long Government category's opportunity set.

Diversification

The fund is well- or fairly diversified, either based on its top-holdings exposure or its number of bond holdings relative to the category average.

Active versus Passive

Passive investing has historically performed well in the Long Government category. Over the long term, passive funds have often outpaced their actively managed counterparts.

Investment Strategy

The investment strategy as stated in the prospectus is: the investment seeks to track the performance of the Bloomberg U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index of extended-duration zero-coupon U.S. Treasury securities. The advisor employs an indexing investment approach designed to track the performance of the Bloomberg U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index. This index includes zero-coupon U.S. Treasury securities (Treasury STRIPS), which are backed by the full faith and credit of the U.S. government, with maturities ranging from 20 to 30 years. The fund invests by sampling the index. At least 80% of it's assets will be invested in U.S. Treasury securities held in the index.

Vanguard's fixed-income index team has a lot of advantages. It taps into a global network of portfolio managers, sector specialists, and trading desks to deliver accurate index tracking in the markets that it touches. It earns an Above Average People Pillar rating.

Experienced managers make up Vanguard’s team. They’re supported by a deep bench of talent that allows them to focus on portfolio construction and tracking performance. Each fund has a lead manager who collaborates with traders and sector specialists to ensure tracking performance stays within well-defined guardrails.

Specialization extends in many directions. ETF specialists help manage creation and redemption baskets, while a dedicated data team handles index changes and corporate actions. International specialists help manage portfolios in local markets outside of the US to keep costs down and tracking tight.

Many bonds aren’t available for trading, so index funds cannot hold every bond in an index. Despite that drawback, Vanguard’s team has continued to invest in new ways to improve the precision of its tracking efforts while keeping a lid on trading costs. It recently expanded its quantitative unit, which developed an optimization tool that incorporates traders' insights and liquidity data to improve tracking performance.

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard Total Bond Market ETF (SecID: FOUSA06C1Y).

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.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Vanguard (Branding Name ID: BN00000AAL), is covered by Morningstar Manager Research.

Performance is evaluated in US Dollar, measured to the end of April 2026.

Short-Term Performance

Over the past 12 months, Vanguard Extended Duration Trs Idx Instl share class returned -2.4%, underperforming its category index, the Bloomberg US Government Long TR USD Index (0.9%), and its Morningstar category peers (0.5%). Over the three-year period, it returned -7% per year, trailing both the index (-1.9% per year) and its Morningstar category peers (-2% per year).

Long-Term Performance

Over five years, the fund returned -10% per year, underperforming the index (-5.1% per year) and its Morningstar Category average (-5.4% per year). Across the 10-year period, the fund returned -3% per year, below the index (-0.8% per year) and its Morningstar Category average (-1% per year).

Vanguard Extended Duration Trs Idx Instl's Prospectus Adjusted Expense Ratio is 0.05% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Long Government Category, where the median fee is 0.18% per year. This cost positioning translates into a Medalist Rating Price Score of 1.45, 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.