The latest "Independent Advisor for Vanguard Investors" newsletter features an article on Vanguard Ultra-Short-Term Bond Fund entitled, "Almost Cash, But Better." Dan Wiener explains, "It isn't a money market fund and never has been, but Ultra-Short-Term Bond has been a steady and reliable performer over its first five years with small price swings, low risk and better-than-cash returns. As Jeff and I postulated at the fund's introduction in 2015, 'Risk should be low, and investors who can handle small changes in NAV may indeed find this fund a good alternative to a money market, one that likely will provide more yield and greater returns over time.' In fact, Ultra-Short-Term Bond has lived up to that prediction, and then some." He continues, "Ultra-Short-Term Bond's returns have been very, very steady. It nearly matched Short-Term Federal's return with less volatility, and it easily outpaced Vanguard's best cash option, Prime Money Market. Only Short-Term Investment-Grade outperformed by any relevant margin. While expenses for the Investor shares have held steady at 0.20%, the Admiral shares saw expenses shaved from 0.12% to 0.10% after a couple of years." Wiener adds, "[O]ver the full first five years, small as the difference may be, the Admiral shares' 1.82% annualized return was higher than the Investor shares' 1.73% compounded gain. As I said, volatility has been low. When you consider drawdowns, UltraShort-Term Bond barely saw a month of negative returns. In fact, in its first five years, the fund only lost money in four months, with the largest loss a 0.13% decline in November 2015. Not surprisingly, Ultra-Short-Term Bond's yield has remained substantially better than cash.... [I]t's also typically out-yielded short-term funds like Short-Term Treasury and Short-Term Federal. Daily price volatility has also been low. Since its introduction at a $10 net asset value, the lowest the fund's price has ever gone is $9.95, and the highest price it's seen is $10.07." Finally, the piece adds, "Ultra-Short-Term Bond's NAV hit a record high in March and then fell out of its 'zone'--hitting a new low of $9.92 at month's end. As a result, the fund's 1.2% loss in March clocked in as its worst month by a wide margin. Does this concern me? Absolutely not.... [Y]ou can see that the fund's NAV has already rebounded. The fund's 0.8% return in April is its best on record and pulled its year-to-date return into positive territory. Plus, if there's one thing I'm sure of, it's that Vanguard's bond department is keeping an eye on risks and on the diversification of this fund’s portfolio -- making sure no single position puts the fund in jeopardy.... Do I recommend this fund today? Absolutely. Furthermore, I completely expect that when the bond markets settle down, Ultra-Short-Term Bond will remain one of the best non-cash substitutes for a money market that money can buy."

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