The fund will seek to track the performance of the Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, a market-weighted index that measures the performance of inflation-protected public obligations of the U.S. Treasury that have a remaining maturity of less than five years. The benchmark index has an effective duration of 2.53 years and an average maturity of 2.59 years (as of June 30).
The fund will offer four low-cost share classes: Investor Shares, Admiral Shares, Institutional Shares and ETF (exchange-traded fund) Shares.
“The new Short-Term Inflation Protected Securities Index Fund will provide an additional choice for investors who are seeking protection from inflation,” said Vanguard Chief Investment Officer Gus Sauter. “The fund’s objective will be to generate returns more closely correlated with realized inflation and to offer investors the potential for less volatility of returns relative to a longer-duration TIPS fund.”
The fund’s ETF Shares have an estimated expense ratio of 0.10%. The fund’s Investor Shares, which require a $3,000 minimum initial investment, have an estimated expense ratio of 0.20%; the Admiral Shares, which require a $10,000 minimum initial investment, have an estimated expense ratio of 0.10%; and the Institutional Shares, which require a $5 million minimum initial investment, have an estimated expense ratio of 0.07%. To offset the transaction costs of purchasing TIPS, the fund will assess a 0.25% purchase fee on all shares (excluding ETF shares).