Comparison of Vanguard Bond ETFs: Yield vs. Risk
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy META?
Source: NASDAQ.COM
- Yield Comparison: Vanguard Intermediate-Term Corporate Bond ETF (VCIT) offers a yield of 4.6%, significantly higher than Vanguard Total Bond Market ETF (BND) at 3.9%, making it particularly appealing for income-seeking investors in a low-rate environment.
- Volatility and Returns: While VCIT boasts an impressive 8.9% one-year return compared to BND's 6.7%, it carries higher volatility with 94% of its portfolio in A or BBB-rated bonds, indicating that investors must accept greater risk for potentially higher returns.
- Portfolio Composition: BND's portfolio includes approximately 11,444 bonds, providing extensive diversification with about 70% in U.S. government securities, whereas VCIT focuses solely on corporate debt with 2,249 fixed-income investments concentrated in a few companies.
- Long-Term Performance: Over the past five years, VCIT has achieved a 1.0% annualized return, contrasting with BND's -0.2%, suggesting that while VCIT performs well in the short term, long-term investors should carefully weigh the risks associated with its volatility.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for META is 824.71 USD with a low forecast of 655.15 USD and a high forecast of 1117 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 670.210
Low
655.15
Averages
824.71
High
1117
Current: 670.210
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI-Driven Revenue Growth: Meta achieved a 24% revenue growth in Q4, driven by increased user engagement and stable ad price hikes, demonstrating its effectiveness in AI applications and market potential.
- Generative AI Potential: Meta is planning to leverage generative AI to attract more advertisers, combining personalized content and shopping agent features, which is expected to generate substantial ad revenue and further solidify its market position.
See More
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- Standalone App Testing: Meta is testing the standalone 'Vibes' platform, which allows users to create and share only AI-generated videos, aiming to enhance user experience and attract more content creators.
- User Growth Trend: Since its launch within the Meta AI app in September last year, 'Vibes' has gained strong early user engagement, with Meta noting that users are increasingly leaning into this format for creation and sharing.
- Immersive Experience: The new app provides a focused and immersive environment designed to enhance the experience of creating and discovering AI-generated videos, thereby driving user engagement and community interaction.
- Future Expansion Plans: Meta indicated plans to further expand the app based on community feedback, demonstrating the company's commitment to user needs and strategic positioning for future growth.
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- Bond Market Pressure: Oracle's credit default swap (CDS) pricing surged in November, currently at nearly four times the levels seen in September, indicating market concerns over its debt, which could lead to increased financing costs and impact the company's capital expenditures and investment decisions.
- AI Investment Risks: Oracle and Microsoft face heightened risks due to their $300 billion deal with OpenAI, as market skepticism grows over OpenAI's internal projections of burning through over $100 billion in cash before 2030, potentially undermining investor confidence in AI-related companies.
- Market Divergence: While the bond market adopts a cautious stance on Oracle's outlook, the equity market continues to invest in AI companies, reflecting differing views on the AI sector, which may prompt investors to reassess the value and sustainability of AI firms.
- Alphabet's Advantage: Compared to Oracle and Microsoft, Alphabet has minimal exposure to OpenAI and a stronger financial position, enabling it to better support AI-related capital expenditures, potentially giving it a competitive edge in future market dynamics.
See More
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- Hardware Independence: Alphabet is reducing its reliance on Nvidia by developing its TPU chip in partnership with Broadcom, which is expected to provide a more competitive hardware alternative, while Anthropic's use of Google's TPUs further expands its market influence.
- Financial Advantage: Alphabet's revenue is projected to exceed $400 billion in 2025, a 15% increase, with net income reaching $132.1 billion, showcasing its profitability and financial robustness in the AI sector, providing strong support for future capital expenditures.
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See More
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- Employee Coalition Statement: Over 900 Google workers signed an open letter condemning the violence by U.S. Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), urging the company to disclose its dealings with these agencies and divest from them, highlighting a strong concern for the company's ethical responsibilities.
- Condemnation of Violence: The letter cites recent fatal actions by ICE against Keith Porter, Renee Good, and Alex Pretti, with employees expressing shock at Google's role in these incidents and asserting that the company plays a significant part in perpetuating surveillance and violence, reflecting deep dissatisfaction with corporate policies.
- Call for Safety Measures: Employees demand that Google implement urgent measures to protect worker safety, including flexible work-from-home policies and immigration support, emphasizing that employee safety and well-being should be prioritized in the current political climate, showcasing strong expectations for corporate governance.
- Increasing Industry Pressure: The release of this open letter coincides with mounting pressure on tech CEOs to publicly oppose ICE, indicating that employees seek to leverage collective action to drive the company towards ethical and policy changes.
See More
Comparison of Vanguard Bond ETFs: Yield and Risk
- Yield and Risk Differences: Vanguard's VCIT ETF achieved nearly 9% returns over the past year with a 4.6% dividend yield, while VGIT offered around 7% returns and a 3.7% yield, indicating that VCIT compensates investors for taking on corporate credit risk with higher income.
- Cost and Size: Both ETFs charge an expense ratio of 0.03%, among the lowest in the bond ETF space, with VCIT managing $61.8 billion and VGIT $44.6 billion, reflecting greater market appeal and investor confidence in VCIT.
- Portfolio Composition: VCIT invests primarily in high-quality investment-grade corporate debt, including holdings in Meta and U.S. Treasuries, while VGIT focuses exclusively on U.S. government bonds, offering lower credit risk suitable for conservative investors.
- Market Volatility Response: During market volatility, VGIT typically attracts investors due to the safety of Treasuries, while VCIT may experience greater price fluctuations due to corporate credit risk, necessitating investors to choose based on their risk tolerance.
See More
