Vanguard Launches Low-Cost, Actively Managed Core Bond Fund

Mar 10, 2016, 09:11 ET from Vanguard

VALLEY FORGE, Pa., March 10, 2016 /PRNewswire/ -- Vanguard today introduced Vanguard Core Bond Fund, bringing a low-cost entrant to the core bond fund category.

The new fund offers two low-cost share classes—Investor Shares and Admiral™ Shares—featuring expense ratios well below the core bond fund category average expense ratio of 0.80%.

Share class

Expense Ratio*

Minimum Initial Investment

Investor

0.25%

$3,000

Admiral

0.15%

$50,000

Average Core Bond Fund

  0.80%**


*Estimated

**Source: Lipper as of December 31, 2015.


"Vanguard Core Bond Fund invests primarily in high-quality[1] bonds across the investment-grade market, including Treasury, mortgage-backed, corporate and asset-backed securities of varying yields and maturities. The fund will limit its exposure to non-investment grade bonds to 5%," said Gregory Davis, head of Vanguard Fixed Income Group. "We believe the fund to be well-suited for investors seeking an actively-managed, high-quality, and broadly diversified holding in their fixed income portfolio."                                                                                                  

Vanguard Core Bond Fund is similar to Vanguard Total Bond Market Index Fund, providing low-cost exposure to investment-grade[2] bonds and broad diversification with an intermediate-term average maturity. The fund, however, differs in that it is actively managed, employs a risk-controlled approach, and seeks to outperform the broad-investment-grade U.S. fixed income market through disciplined security selection, sector allocation, and duration[3] decisions.

[1] High-quality bonds indicate bonds with high credit ratings that offer the highest protection for principal and interest payments.
[2] Investment grade is a rating that indicates that the level of default of the bonds in the portfolio is relatively low.
[3] Duration is a measure of sensitivity of the price of a fixed income investment to a change in interest rates.

Vanguard Fixed Income Group: A leader in active fixed income offerings 
As one of the world's largest fixed income managers, Vanguard Fixed Income Group manages approximately $950 billion in global assets. The group began managing bond funds in 1981 and currently manages 51 index and active bond funds and money market funds in the U.S., 16 index and active bond funds in Europe, 11 index and active funds in the Australia, and 5 index bond funds in Canada.

Vanguard Fixed Income Group oversees some of the largest actively-managed fixed income funds in the industry, as shown in the accompanying table. 

Largest Vanguard Fixed Income Funds

Assets
as of 1/31/2016

Expense Ratio* 
(Investor Shares)

Expense Ratio* 
(Admiral Shares)

Vanguard Short-Term Investment-Grade Fund   
(inception 9/1/1977)

$52.9 billion

0.20%

0.10%

Vanguard Intermediate-Term Tax-Exempt Fund 
(inception 2/12/2001)

$47.4 billion

0.20%

0.12%

Vanguard Inflation-Protected Securities Fund          
(inception 6/10/2005)

$23.0 billion

0.20%

0.10%

Vanguard Limited-Term Tax-Exempt Fund           
(inception 9/1/1977)

$21.6 billion

0.20%

0.12%

Vanguard Intermediate-Term Investment-Grade Fund  
(inception 11/1/1993)

$21.5 billion

0.20%

0.10%

*As of February 29, 2016


Three portfolio managers with considerable expertise and depth in the Treasury, agency, investment-grade credit, and mortgage-backed securities markets will manage the fund:

  • Gregory S. Nassour, co-head of Vanguard Investment Grade Credit Group and portfolio manager for the Vanguard Ultra-Short-Term Bond Fund, Vanguard Short-Term Investment-Grade Fund, and Vanguard Variable Insurance Fund Portfolios
  • Brian Quigley, portfolio manager for the Vanguard Short-Term Federal Fund
  • Gemma Wright-Casparius, head of the Treasury/Inflation Group and portfolio manager for Vanguard Inflation-Protected Securities Fund, Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Intermediate-Term Treasury Fund, and Vanguard Long-Term Treasury Fund

The managers have a combined 71 years of investment management experience and 42 years of Vanguard experience.  

About Vanguard
Vanguard is one of the world's largest investment management companies. As of January 31, 2016, Vanguard managed more than $3.2 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 315 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com

All figures are as of January 31, 2016, unless otherwise noted.

For more information on Vanguard funds, visit vanguard.com, or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Visit our website, call 800-662-7447, or contact your broker to obtain a prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

All investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

Vanguard Marketing Corporation, Distributor.

SOURCE Vanguard



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