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Vanguard plans benchmark changes for three bond funds and ETFs

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Vanguard is to change the target benchmarks of three government bond index funds and exchmage traded funds (ETFs) to pure Treasury indexes.

Vanguard Short-Term Government Bond Index Fund and ETF (VSBSX/VGSH), Vanguard Intermediate-Term Government Bond Index Fund and ETF (VSIGX/VGIT), and Vanguard Long-Term Government Bond Index Fund and ETF (VLGSX/VGLT) are expected to transition from Bloomberg Barclays US Government Float-Adjusted indexes to Bloomberg Barclays US Treasury Float Adjusted indexes in the fourth quarter of this year. The funds will be renamed to reflect the new benchmarks.
 
“Following the transition, the funds will offer investors pure exposure to discrete segments of the US Treasury market and provide them the flexibility to tailor their bond portfolios to reflect their risk and return objectives,” says Greg Davis, Vanguard’s chief investment officer. “In addition, with the greater liquidity in the Treasury market, we expect that the bid-ask spreads on the funds’ ETF shares will be considerably lower.”
 
Following the transition, advisors, institutions, and individual investors will have a choice of index or active options in a range of maturities covering the corporate and US Treasury market. Vanguard offers series of short-, intermediate-, and long-term active and index corporate credit funds, and a series of active US Treasury funds. The move from government to US Treasury index funds results in a series that will complement existing actively managed counterparts.

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