Products November 23, 2009

Vanguard Introduces 7 Bond Index Funds

Vanguard has introduced seven bond index funds with ETF shares featuring expense ratios of 0.15%.

Reported by

The funds, which expand Vanguard’s bond index family to 12, also offer Signal shares with estimated expense ratios of 0.15% and Institutional shares with expense ratios of 0.09%, according to a press release.

The funds and the benchmarks they seek to track are as follows:

 

Fund (ETF Ticker)

Barclays Capital Index

Vanguard Short-Term Government Bond Index Fund (VGSH)

U.S. 1–3 Year Government Float Adjusted Index

Vanguard Intermediate-Term Government Bond Index Fund (VGIT)

U.S. 3–10 Year Government Float Adjusted Index

Vanguard Long-Term Government Bond Index Fund (VGLT)

U.S. Long Government Float Adjusted Index

Vanguard Short-Term Corporate Bond Index Fund (VCSH)

U.S. 1–5 Year Corporate Index

Vanguard Intermediate-Term Corporate Bond Index Fund (VCIT)

U.S. 5–10 Year Corporate Index

Vanguard Long-Term Corporate Bond Index Fund (VCLT)

U.S.Long Corporate Index

Vanguard Mortgage-Backed Securities Index Fund  (VMBS)

U.S. MBS Float Adjusted Index


“Vanguard’s expanded fixed-income lineup provides greater choice and more price competition in the market, and offers financial advisers and institutions more flexibility to tailor the credit quality and duration of their bond exposure,” said Gus Sauter, Vanguard’s chief investment officer, in the release.  

Vanguard noted that unlike a conventional bond index fund, a bond ETF can trade at a substantial premium or discount to its net asset value based on overall supply and demand of bonds in the market. The firm published an article, “The choice between ETFs and conventional fund shares,” in the autumn 2009 edition of its shareholder newsletter. The article examines the similarities and differences between the two products.  Investors can request a free copy of the newsletter by calling 877.662.7447, or read it at www.vanguard.com/share-choices.

The new bond index funds will be managed by the Vanguard Fixed Income Group, which oversees nearly $485 billion in assets, including $114 billion in bond index fund assets and $10.4 billion in bond ETF assets.

Interested parties can call 800.662.7447 to obtain a fund prospectuses.

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