Vanguard has launched a broad market international bond index fund, Vanguard Total International Bond II Index Fund, which provides international fixed income exposure for Vanguard Target Retirement Funds, Vanguard Target Retirement Trusts, and Vanguard LifeStrategy Funds. They will be the only investors in the new fund.
The investment strategy of the new fund mirrors that of Vanguard Total International Bond Index Fund and will seek to track the same benchmark. Effective immediately, Total International Bond II Index Fund will receive new cash flows from the Target Retirement series and LifeStrategy series. The fund of funds’ existing Total International Bond Index Fund holdings will be transitioned to the new fund in a prudent and tax-sensitive manner over time.
“This will enable Vanguard to segregate transaction costs produced by the fund of funds from those generated by other investors in Total International Bond Index Fund, which we believe to be in the best interest of investors,” says Kaitlyn Caughlin, head of Vanguard Portfolio Review Department.
Given the significant market volatility experienced last year, and in an effort to protect investors’ interests, Vanguard delayed the launch until market conditions improved. The investment strategies, asset allocations, glide path, and expense ratios for Vanguard Target Retirement series and LifeStrategy series remain the same.