Core-Plus Bond Fund vs Multi-Sector Bond Fund

[hondo]

Is there a difference between a Core-Plus Bond Fund and a Multi-Sector Bond Fund?  Vanguard has announced it is opening one of each. I have read the Prospectus for each and can see no significant difference in them.  They seem to invest in about the same kind of bonds. Thanks in advance for your reply.

[anitya]

Good observation. In Vanguard's case, if I remember correctly from reading the prospectus, I would treat multi-sector as Core ++ with more drift into EM, Junkier, and Structured products.  I am using Plus to mean more credit risk. 

At the bottom of M* quote page, we can see fund classifications and Multisector (or Non-traditional) is not one of them. Not sure why M* uses Multisector category because they do not do a good job of putting funds in this category. I personally do not pay much attention to classifications within the Taxable bonds. I would just read the prospectus, reports, and research fund website and decide whether you want to hire the manager.

If the above is not satisfactory, address the question to Yogibearbull and he may give you a better answer.

[hondo]

Aug 7, 2021 20:46:33 GMT hondo said:

Thanks anitya. I think you gave a pretty good summary. I had made a post on the AC forum yesterday asking about the same thing. YBB replied right after I entered this post. At least I saw his reply right after I entered this one. He said about the same thing you did concerning HY, etc. Yogi said the "Core-plus may be called multi-lite". I think that would be a good description.  About the same as your description said in another way, "Treat multi-sector as Core ++".

[yogibearbull]

M* defines:

Core bonds with less than 5% HY.

Core-plus has no specifications (but range 5-35% HY can be deduced from other definitions).

Multisector with 35-65% HY.

HY with 65%+ HY.

Not all categories are mentioned at the bottom of the Quote page probably because there are just too many. See www.morningstar.com/content/dam/marketing/shared/pdfs/Research/Morningstar_Category_Definitions_for_Funds_US.pdf?cid=RED_RES0002

[FD1000]

Aug 7, 2021 17:43:49 GMT hondo said:

Is there a difference between a Core-Plus Bond Fund and a Multi-Sector Bond Fund?  Vanguard has announced it is opening one of each. I have read the Prospectus for each and can see no significant difference in them.  They seem to invest in about the same kind of bonds. Thanks in advance for your reply.

Core-Plus Bond has higher % in higher-rated bond and usually less options.  
VG usually uses higher-rated bonds + less flexibility than most other companies.
Usually it means: if you are looking to buy and hold long term, cheap funds with reliable, predictable risk/reward, VG funds are an easy option.

If you are looking for potentially better performance, higher distributions, more flexibility, and less diversification (which is good in certain times), I would ALSO look at other companies.

A good example: in the HY Munis category: VWALX is the exception to the rule. It has higher-rated Munis than most(maybe all) others.

[Chahta]

I would assume that core plus is a plain vanilla type fund where multi-sector funds are not and can use derivatives etc.