This Portfolio Is Leaning Into Duration With a 5.7% Yield on the Line
Key Points
Davidson Capital Management increased its VCLT position by 54,315 shares; the estimated trade size was $4.19 million based on quarterly average pricing.
Meanwhile, the quarter-end value of the stake rose by $3.46 million, reflecting both trading and price movements.
Post-trade, Davidson Capital Management holds 422,785 VCLT shares worth $32.07 million.
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On January 28, Davidson Capital Management Inc. disclosed a buy of the Vanguard Long-Term Corporate Bond ETF (NASDAQ:VCLT), adding 54,315 shares for an estimated $4.19 million based on quarterly average pricing, according to its latest SEC filing.
What happened
According to a Securities and Exchange Commission (SEC) filing dated January 28, Davidson Capital Management Inc. increased its position in the Vanguard Long-Term Corporate Bond ETF (NASDAQ:VCLT) by 54,315 shares. The estimated transaction value for the quarter was $4.19 million, calculated using the average closing price over the period. The end-of-quarter position, meanwhile, was valued at $32.07 million, a $3.46 million increase from the prior quarter.
What else to know
This was a buy, bringing the VCLT stake to 6.94% of Davidson Capital Management's $462.00 million in 13F reportable AUM.
Top five holdings after the filing:
- NASDAQ:VCIT: $75.84 million (16.4% of AUM)
- NYSEMKT:XMMO: $53.87 million (11.7% of AUM)
- NYSEMKT:SPHQ: $47.64 million (10.3% of AUM)
- NASDAQ:QQQ: $32.86 million (7.1% of AUM)
- NASDAQ:VCLT: $32.07 million (6.9% of AUM)
As of January 27, VCLT shares were priced at $76.61, up 0.9% over the past year.
ETF overview
| Metric | Value |
|---|---|
| AUM | $8.36 billion |
| Yield | 5.66% |
| Price (as of January 27) | $76.61 |
| 1-Year Total Return | 7% |
ETF snapshot
- Investment strategy: VCLT seeks to track the performance of the Bloomberg U.S. 10+ Year Corporate Bond Index, focusing on long-term, investment-grade corporate bonds.
- Portfolio composition: It primarily holds U.S. dollar-denominated, fixed-rate, taxable bonds issued by U.S. and non-U.S. industrial, utility, and financial companies with maturities greater than 10 years.
- Fund structure: It’s a passively managed ETF designed for investors seeking exposure to long-duration corporate bonds.
The Vanguard Long-Term Corporate Bond ETF provides diversified exposure to investment-grade corporate bonds with maturities exceeding 10 years, appealing to investors seeking higher yield potential and duration risk. The fund's scale and indexing approach contribute to cost efficiency and broad market representation. Its competitive edge lies in disciplined tracking of a benchmark index and a focus on high-quality, long-term debt instruments.
What this transaction means for investors
With equity exposure spread across large-cap growth, quality factor ETFs, and broad market benchmarks, Davidson Capital is making a smart diversification play by increasing long-term corporate bond exposure with this move.
The Vanguard Long-Term Corporate Bond ETF offers exposure to investment-grade bonds with maturities beyond 10 years, pairing scale with cost efficiency. As of late January, the fund carried a 30-day SEC yield of 5.66% and charged just a 0.03% expense ratio, making it one of the cheapest ways to access long-duration corporate credit. Price performance has been muted over the past year, up less than 1%, but its total return is upwards of 7%.
Nevertheless, this is now a top holding, sitting alongside intermediate-term corporate bonds and equity-heavy allocations like QQQ and factor-based stock ETFs. Together, that mix suggests intentional balance rather than hedging. Intermediate bonds manage near-term rate risk, while long bonds lock in elevated yields for investors willing to absorb volatility.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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