Summary

• Vanguard Intermediate-Term Corp Bond Index Fund ETF offers a decent ~5.17% SEC yield and ultra-low 0.03% expense ratio for intermediate-duration fixed-income exposure.
• VCIT strikes a balance between yield and duration, outperforming short-duration funds on yield but requiring acceptance of moderate duration risk and tight credit spreads.
• Current credit spreads for VCIT's A- and BBB-rated holdings are tight, limiting compensation for credit risk and necessitating disciplined position sizing and regular monitoring.
• VCIT is best used as a substitute for long-duration allocations, not as a cash proxy, and warrants caution given interest rate and credit spread uncertainties.

The interest-rate trajectory is relatively uncertain now, with the Fed holding its current policy rates, but more importantly reiterating its priority for price stabilisation, or in other words, inflation control. We know that the current inflation trajectory is at a

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