If you mention bonds today, most investors think of turmoil in the mortgage-backed fixed-income markets. In times such as these, retreating to the safety of Treasury securities becomes an attractive option. But rates on Treasuries have plummeted, so they've become less attractive than they used to be.

High-quality corporate bonds offer one alternative to Treasuries. For instance, the Vanguard Intermediate-Term Investment-Grade Fund (VFICX), which seeks moderate and sustainable levels of current income, may appeal to those looking for relative safety without sacrificing too much yield. This fund offers an alternative to joining the crowd that's chasing high-priced and low-yielding U.S. Treasury funds.

Fund facts
Begun on Nov. 1, 1993, this fund looks over net assets of $5.9 billion and has an expense ratio of 0.21%. The minimum non-IRA investment is $3,000. Robert F. Auwaerter has provided consistent leadership as the fund's lead manager since late 1993.

The fund invests at least 80% of its assets in short- and intermediate-term investment-grade securities. AAA- and AA- rated securities make up half of the fund's portfolio, with single-A rated securities accounting for almost another third.

The companies behind the bonds this fund owns are among the best known in the world, including Verizon (NYSE: VZ), General Electric (NYSE: GE), and United Technologies (NYSE: UTX). You'll also find securities that various financial companies, such as Discover (NYSE: DFS), Citigroup (NYSE: C), and HSBC (NYSE: HBC), have issued. The portfolio is concentrated in financial and industrial bonds, with a small allocation to Treasuries. The fund has minimal exposure to asset-backed securities, and almost half of its holdings have maturities between five and 10 years, with another 37% ranging from one to five years.

As for performance, the fund currently yields 5.02%. It has an average annual return since inception of 6.18% and closed out 2007 with a 6.14% return.

Portfolio fit
Sticking with Treasury or government agency bonds is a low-risk, low-return approach to manage market volatility. For investors seeking higher returns, investment-grade bonds concentrated in the intermediate-term sector of the market might warrant a closer look. The Vanguard Intermediate-Term Investment-Grade Fund may therefore be one investment vehicle worth looking at.

Related articles:

Learn more about mutual funds and ETFs with the Fool's Champion Funds newsletter service. A free 30-day trial will get you started on the road to investing success.

Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own any of the funds or securities mentioned in this article. The Motley Fool has a disclosure policy.