Vanguard has launched the 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 per cent.
“Vanguard Core Bond Fund invests primarily in high-quality 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 per cent,” says 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 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 US fixed income market through disciplined security selection, sector allocation, and duration decisions.