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Intermediate Term Core/Core Plus Bond Funds

I have been looking at a few Intermediate-Term bond funds and am having a problem differentiating between two Baird funds. One is Baird Aggregate Bond Institutional BAGIX and the other Baird Core Plus Bond Institutional BCOIX. Both look good. Any assistance with the differences would be appreciated.

On the related, I have also been looking at Vanguard Core Bond Institutional VCOBX. It looks like a reasonably good Intermediate-Term bond fund with a low 0.10% ER. Any opinions?

Any thoughts/recommendations for an Intermediate-Term Core/Core Plus Bond Fund would be great.

Mona

Comments

  • The Aggregate Bond Fund, like its benchmark, is higher grade, investing in virtually no junk bonds. Even among investment grade bonds, it takes more risk, holding a lower percentage of government bonds and a higher percentage of BBB bonds.

    It's true that right now there's not much difference in the two funds' junk holdings - 3.0% vs. 0.4%. But that's not always the case, and even now the credit risk profile is higher for the Core Plus Fund.

    Comparing the two (or the two different indexes they use as benchmarks) gives a pretty textbook illustration of the difference between a core bond fund and a core plus bond fund. Here are their two fact sheets that one can read side by side:

    https://content.rwbaird.com/BairdFunds/PDF/Fact-Sheets/Bond-aggregate-fund.pdf
    https://content.rwbaird.com/BairdFunds/PDF/Fact-Sheets/Bond-core-plus-fact-sheet.pdf

    There's little magic when it comes to vanilla bond funds. You've got a couple of large knobs: credit risk and interest rate risk (duration). Turning these knobs will increase or decrease relative returns, and obviously risk. The knob setting that's different between these two funds is the credit risk. Not even a difference in management risk, as the teams are the same.
  • edited March 8
    @Mona DODIX. Hard to beat. Yield is THIS CLOSE to 3 percent. Also DLFNX. Yield there is not so high. (TRP) PRCIX. But check out the proviso, per Morningstar's analysts: lots of personnel changes. I'm with TRP and this one looks attractive to me, apart from the small-ish dividends.
  • msf and Crash, thanks for your posts.

    Mona
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