Vanguard today filed a registration statement with the US Securities and Exchange Commission to launch the Vanguard Ultra-Short-Term Bond Fund.
The new actively managed fund will round out Vanguard’s taxable bond fund lineup, which comprises 10 active funds and 12 index funds covering the broad quality and duration spectrum. The fund will invest in high-quality bonds, including a combination of money market, government, and investment-grade corporate securities with an expected average rating of Aa and duration of approximately one year.
“Vanguard Ultra-Short-Term Bond Fund is a low-cost and diversified option for investors seeking to augment the bond component of a balanced portfolio. It will afford investors the opportunity for further duration diversification,” said Vanguard CEO Bill McNabb. “The new fund, however, should not be used as a money market fund substitute, as it will subject investors to some level of principal risk.”
Vanguard offers a series of actively-managed money market and investment-grade bond funds for investors, financial advisors, and institutional investors, as shown in the accompanying table.
The fund, which is expected to be available in the first quarter of 2015, will offer low-cost Investor Shares and Admiral Shares. Investor Shares, with an estimated expense ratio of 0.20%, will require a minimum initial investment of USD3,000.Admiral Shares, with an estimated expense ratio of 0.12%, will require a minimum initial investment of USD50,000.
Gregory S. Nassour, CFA and David Van Ommeren, principals and senior portfolio managers in Vanguard Fixed Income Group, will co-manage the new fund. Nassour, who started at Vanguard in 1992, currently manages multiple investment-grade bond funds. Van Ommeren joined Vanguard in 1991 and is co-leader of the asset-backed and commercial mortgage-backed securities team.