Vanguard Long-Term Corporate Bond ETF [VCLT]
By: Ted Black, CFP©
Winter 2026 (Vol. 43, No. 4)
Experienced investors have long recognized the importance of asset allocation, investing in different asset classes such as Stocks, Bonds and Cash Equivalents, and recognize it as perhaps the most important element in determining the overall level of risk and return of one’s portfolio.
When it comes to the Bond portion of a portfolio, our primary objectives are to provide the portfolio with some level of protection in the event of a pullback in the stock market and to earn a rate of return that exceeds the return of a safe money investment such as a Certificate of Deposit (CD) or Money Market.
I first wrote about The Vanguard Long-Term Corporate Bond ETF (VCLT) back in mid-2024, and given the current interest rate environment, I thought it was worth revisiting. The Federal Reserve Board (the Fed) is consistent in reminding the market that upcoming decisions on the level and direction of interest rates will be based on currently available inflation and employment data, so there are no guarantees as to what happens next. With that said, although there are some differences of opinion within the Fed regarding the direction of interest rates, the consensus among market participants is that the current downward trend in interest rates is likely to continue in 2026.
The Vanguard Long-Term Corporate Bond ETF (VCLT) invests primarily in U.S. dollar-denominated investment-grade fixed income securities issued by industrial, utility, and financial companies with maturities greater than 10 years. As has been noted before, there’s an important measurement in the bond market called “duration”. Duration is a measure of the sensitivity of the price of a bond to a change in interest rates. In almost all scenarios, the higher the duration, the more a bond’s price will increase if interest rates fall or decrease if interest rates rise.
Please note that based on the composition of its holdings, VCLT has a high duration, meaning that it’s quite sensitive to changes in interest rates. If the consensus is correct and in fact interest rates do continue to fall in 2026, between its attractive current yield of 5.65% (dividends paid out monthly) and the potential for price appreciation, this fund may be a viable addition to the bond portion of one’s portfolio.
Performance annualized and updated through 12/31/2025:
1-Year: +7.28%; 3-Year: +5.36%; 5-Year: -3.00%.
The gross annual expense ratio is very low 0.03%.
If you’re interested in this fund, or would like a portfolio review to determine if this fund might be an appropriate addition to your portfolio, please call Ted Black, CFP® at 888-878-0001, extension 3.
Statistics and information provided by Morningstar and Vanguard. Please visit the Vanguard website at https://investor.vanguard.com/ investment-products/etfs/profile/vclt for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds and ETFs are not FDIC insured.
Mutual funds and ETFs are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money.
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.