Vanguard filed an amended
registration statement for the fund with the Securities and Exchange Commission
(SEC) that reflects a new target index, as well as lower estimated expense
ratios for various share classes of the fund and the elimination of its planned
purchase fee. The Total International Bond Index Fund will seek to track the
performance of the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped
Index (USD Hedged). The index comprises approximately 7,000 high-quality
corporate and government bonds (average credit quality AA2/AA3) from 52
“Vanguard is pleased to bring its international fixed income indexing expertise and low-cost approach to U.S. investors. International bonds can serve as an important diversifier, especially for U.S. investors who currently have modest exposure to the asset class,” said Bill McNabb, chief executive of Vanguard.
McNabb noted that Vanguard research found a strategic allocation to hedged international bonds substantially broadens a U.S. bond portfolio, which can further moderate risk in a diversified portfolio. Vanguard believes 20% of the bond portion of a U.S. investor’s portfolio can be considered a potential target allocation to hedged international bonds.