(PUB) Morningstar FundInvestor - page 411

23 Morningstar FundInvestor September 2014
Morningstar Analyst Rating 08-18-14
Œ
Morningstar Pillars
Process
Performance
People
Parent
Price
Positive
Positive
Positive
Positive
Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive § Negative ¶ Neutral
NAV 13.68 12.98 14.53 14.11 13.00 12.55 11.52 12.45 11.78 12.16 12.57 12.21
Total Return % 6.33 -8.92 6.78 13.24 6.17 10.80 -2.85 11.59 0.43 2.59 8.27 8.00
+/-BC Agg Bnd 5.94 -6.90 2.57 5.40 -0.37 4.87 -8.09 4.62 -3.90 0.16 3.93 3.90
+/-BC US Tr US TIPS 0.01 -0.31 -0.20 -0.32 -0.14 -0.61 -0.50 -0.05 0.02 -0.25 -0.19 -0.40
Income Return % 0.93 1.50 2.61 4.43 2.55 1.86 5.01 5.60 3.54 5.53 4.70 3.85
Capital Return % 5.41 -10.42 4.17 8.81 3.62 8.94 -7.86 5.99 -3.11 -2.94 3.57 4.15
Total Rtn % Rank Cat 20 56 28 10 37 35 57 10 21 22 22 30
Income $ 0.12 0.22 0.37 0.57 0.32 0.21 0.61 0.65 0.43 0.68 0.57 0.45
Capital Gains $ 0.00 0.05 0.17 0.02 0.00 0.00 0.00 0.00 0.00 0.05 0.07 0.12
Expense Ratio % . 0.20 0.20 0.20 0.22 0.25 0.20 0.20 0.20 0.17 0.18 0.22
Income Ratio % . 1.33 2.55 4.21 2.48 2.00 5.02 3.87 4.83 4.83 3.46 4.55
Turnover Rate %
. 44 33 28 29 14 28 21 47 73
. 108
Net Assets $mil 6,263 6,577 16,075 15,220 12,979 12,946 8,593 6,662 5,440 6,332 7,182 4,746
Performance 08-31-14
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2010
2011
2012
2013
2014
0.36 3.90 2.57 -0.74 6.17
1.85 3.40 4.84 2.56 13.24
0.68 3.24 2.14 0.57 6.78
-0.34 -7.34 0.84 -2.19 -8.92
1.99 3.72 . . .
Trailing Total +/- BC +/- BC %Rank Growth of
Return% Agg BndUS Tr US TIPS Cat $10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
0.83 0.67 0.06 18 10,083
3.77 3.46 -0.03 18 10,377
5.74 5.17 0.04 22 10,574
2.00 1.45 -0.12 26 10,612
5.24 4.52 -0.21 19 12,909
4.68 2.43 -0.24 25 15,799
. . . . .
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
0.99 26 0.99 49
4.16 19 1.02 53
3.34 19 1.28 44
Potential Capital Gain Exposure: 7% of assets
Rating and Risk
Time Load-Adj Morningstar Morningstar Morningstar
Period Return % Rtn vs Cat Risk vs Cat Risk-Adj Rating
1 Yr 5.74
3 Yr 2.00 +Avg +Avg
5 Yr 5.24 +Avg +Avg
10 Yr 4.68 +Avg +Avg
Incept 6.35
Other Measures Standard Index Best Fit Index
BC Agg Bnd BC US Tr US TIPS
Alpha -2.9 -0.1
Beta 1.73 1.02
R-Squared 78 99
Standard Deviation 5.17
Mean 2.00
Sharpe Ratio 0.40
Morningstar’s Take by Kiran Lalani 08-18-14
Vanguard Inflation-Protected Securities lets its low
expenses do the heavy lifting.
Gemma Wright-Casparius employs a
straightforward approach that sticks strictly to Treasury
Inflation-Protected Securities, unlike some of its peers
in the inflation-protected bond category that regularly
employ other instruments like mortgage-backed
securities, emerging-markets debt, or even corporate
bonds. In keeping this fund closely aligned with its
Barclays U.S. TIPS Index benchmark, she does,
however, make subtle moves between various maturity
bonds as relative-value opportunities arise based on
her team’s quantitative models and market availability.
While the fund steers clear of credit risk, it is no
stranger to interest-rate risk. At 7.9 years, its duration
runs higher than the 7.5 years for its benchmark and
also ran higher than its average peer’s duration as of
June 2014. The longer duration stance has exposed the
fund to higher short-term price volatility than its peers.
For instance, in August 2012, when yields rose on
positive macroeconomic news, the fund lost 0.2% and
underperformed its peer group. And in 2013, when
yields spiked again, the fund’s 8.9% loss was worse
than both its benchmark’s 8.6% slide and the category
median’s 7.9% loss.
That said, the fund has delivered over the long
haul. Its 10-year net annualized return of 4.9% through
June 2014 ranks near the top quartile of its peers.
That strong showing is partly driven by its low
expenses. The 0.10% expense ratio for its Admiral
share class is much lower than the median of 0.60%
for similarly distributed funds. The impact is evident in
the fund’s 10-year annualized return before expenses
of 5.1%, which ranks in the bottom third of its peers.
In the end, the fund provides straightforward TIPS
exposure at a low cost and has proved itself over time.
It merits a Morningstar Analyst Rating of Gold.
Address: PO Box 2600
Valley Forge, PA 19482
800-662-7447
Web Address: www.vanguard.com
Inception: 06-29-00
Advisor: Vanguard Group, Inc.
Subadvisor: None
NTF Plans: Vanguard NTF
Minimum Purchase: $3000 Add: $100 IRA: $0
Min Auto Inv Plan: $0 Add: .
Sales Fees: No-load
Management Fee: 0.17%
Actual Fees: Mgt:0.17% Dist: .
Expense Projections: 3Yr:$64 5Yr:$113 10Yr:$255
Income Distribution: Quarterly
Data through August 31, 2014
Vanguard Inflation-Protected Secs Inv Ticker Status Yield SEC Yield Total Assets Mstar Category
VIPSX Open 2.3% -0.25% $26,110 mil Inflation-Protected Bond
42 15 50 30 19 6 17 18 64
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 08-14
Historical Profile
Return
Risk
Rating
Above Avg
Above Avg
Above Avg
Investment Style
Fixed Income
Income Rtn %Rank Cat
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
BC Agg Bnd
Performance Quartile
(within Category)
History
10.0
12.0
14.0
16.0
18.0
Portfolio Analysis 06-30-14
Date of Amount Value % Net
Total Fixed-Income:37 Maturity $000 $000 Assets
US Treasury TIP 04-15-18 1,416,846 1,500,300 5.75
US Treasury TIP 04-15-17 1,279,831 1,381,348 5.29
US Treasury TIP 04-15-16 1,140,286 1,256,666 4.82
US TREASURY TIP 01-15-23 1,200,545 1,227,852 4.70
US Treasury TIP 07-15-23 1,170,000 1,213,869 4.65
US Treasury TIP 07-15-22 1,159,978 1,202,936 4.61
US Treasury TIP 0.125% 01-15-22 1,135,279 1,196,378 4.58
US TREASURY TIP 01-15-24 1,115,000 1,172,705 4.49
US Treasury TIP 07-15-21 1,000,026 1,107,280 4.24
US Treasury TIP 1.125% 01-15-21 901,289 1,057,356 4.05
US TREASURY TIP 01-15-25 646,940 984,654 3.77
US Treasury TIP 1.25% 07-15-20 794,600 946,243 3.63
US TREASURY TIP 04-15-29 328,121 690,625 2.65
US Treasury TIP 2% 01-15-26 476,198 669,136 2.56
US TREASURY TIP 07-15-16 504,666 642,784 2.46
US Treasury Note 04-15-19 615,000 640,408 2.45
US TREASURY TIP 01-15-20 512,000 615,337 2.36
US TREASURY TIP 01-15-17 444,389 571,391 2.19
US Treasury TIP 3.625% 04-15-28 267,390 549,619 2.11
US Treasury TIP 2.375% 01-15-27 378,539 545,266 2.09
Current Investment Style
1
1 Avg Eff Duration 7.9 Yrs
Avg Eff Maturity 8.6 Yrs
Avg Credit Quality AAA
Avg Wtd Coupon 1.20%
Avg Wtd Price 121.61% of par
figure provided
by fund
Duration
Ltd Mod Ext
Quality High
Med Low
Special Securities
Restricted/Illiquid Secs 0
Exotic Mortgage-Backed .
Emerging-Markets Secs 0
Options/Futures/Warrants No
Credit Analysis % bonds 06-30-14
AAA 100
AA 0
A 0
BBB 0
BB 0
B 0
Below B 0
NR/NA 0
Sector Breakdown % of assets
US Treasury 63
Non US Treasury 0
US Treasury Inflation-Protected 36
Non US Inflation-Protected 0
Government Related 0
Corporate 0
Agency MBS 0
Non-Agency Residential MBS 0
Commercial MBS 0
Asset-Backed 0
Covered Bond 0
Municipal 0
Composition - Net
Cash 1.2 Bonds 98.8
Stocks 0.0 Other 0.0
Coupon Range % of Bonds Rel Cat
1.00=Category Average
0% PIK 0.0 0.0
0% to 6% 100.0 1.0
6% to 8% 0.0 0.0
8% to 10% 0.0 0.0
More than 10% 0.0 0.0
© 2014Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted to be accurate, correct, complete or
timely. Pastperformance isnoguarantee of future results.Access updated reports at To order reprints, call 312-696-6100. mfb.morningstar.com. Mutual Funds ß® FI
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