Vanguard is to introduce two new active fixed income funds: Vanguard Core-Plus Bond Fund and Vanguard Multi-Sector Income Bond Fund.
The funds are designed to meet the needs of clients seeking actively managed “core” and “satellite” bond portfolios and will augment the lineup of higher-alpha, diversified fixed income strategies managed by Vanguard Fixed Income Group.
“Vanguard has invested heavily in active management talent and capabilities for decades, resulting in a lineup of active bond funds that leverage proven portfolio manager expertise and help clients achieve investment success,” says Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. “Vanguard’s client-centric approach to product development has produced a carefully curated line-up that drives long-term value and meets evolving investor needs.”
The new funds represent Vanguard’s ongoing efforts to improve investor outcomes through single-fund fixed income strategies with enduring investment merit and low costs. Core-Plus Bond will consist of a broadly diversified portfolio invested primarily in Treasury, mortgage-backed, and other U.S. investment-grade securities. In addition, the fund may invest beyond the U.S. investment-grade bond market in areas such as high-yield corporate securities and emerging markets debt of all credit quality ratings. Core-Plus Bond will be differentiated from Vanguard Core Bond Fund in its incremental flexibility across higher-alpha potential sectors, particularly in its greater exposure to high-yield and emerging markets. The fund will have an estimated expense ratio of 0.30 per cent for Investor Shares and 0.20 per cent for Admiral Shares, compared with an average expense ratio of 0.48 per cent for industry peers1.
Multi-Sector Income Bond will offer exposure primarily to US investment-grade securities, US high-yield corporate securities, and emerging markets debt of all credit quality ratings. Multi-Sector Income Bond will have an estimated expense ratio of 0.40 per cent for Investor Shares and 0.30 per cent for Admiral Shares, compared with an average expense ratio of 0.98 per cent for industry peers.
Vanguard expects to make Core-Plus Bond available to investors in the fourth quarter of 2021 and Multi-Sector Income Bond available for public investment at a later date.
