Vanguard adds an actively managed global fixed income fund
14 September 2017 | Asset classes
The new Vanguard Global Credit Bond Fund is an actively managed fixed income fund that leverages Vanguard's investment management expertise, scale and risk-controlled process. This Ireland-domiciled fund seeks to deliver optimal return potential relative to its benchmark – the Bloomberg Barclays Global Aggregate Credit Index – while mitigating risk.
The fund invests in an array of investment-grade global credit bonds, which provide diversification by investing not only in corporate bonds, but also in government-related, non-corporate-issued securities, such as agency securities, sovereign debt and supranational bonds. It also provides investors with broad exposure to issuers across the yield curve, further supporting the fund's role in offsetting the volatility of equities in an investor's portfolio.
As the manager of the fund, Vanguard Fixed Income Group (FIG) seeks to generate sustainable outperformance by:
- Using its extensive active credit portfolio management experience in security selection, sector allocation and regional allocation decisions.
- Leveraging Vanguard's economies of scale to keep investment costs low, with an ongoing charges figure of just 0.35% for investor share classes and 0.30% for institutional share classes the Vanguard Global Credit Bond Fund.
- Engaging in a disciplined, risk-controlled process of fund management by incorporating the insights and expertise of Vanguard Investment Strategy Group and Vanguard Risk Management Group.
FIG is a global leader in fixed income investing with over 35 years of experience and almost £1 trillion in assets under management globally as at 31 July 2017. Our team has a consistent track record in actively managing bond funds, having outperformed 91% of their Lipper peer groups over the 10-year period ended 31 December 20161
By employing our internal fund management for the Vanguard Global Credit Bond Fund, long-term performance will rely less on the decisions of a star manager and more on Vanguard's sustainable advantages in scale, cost management and risk mitigation.
1Source: Vanguard calculations of data as at 31 December 2016 from Lipper, a Thomson Reuters company. For the ten-year period, 20 of 22 Vanguard active-taxable bond funds outperformed their peer-group averages. Only funds with a minimum ten-year history were included in the comparison.
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Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds. The funds may invest in financial derivative instruments that could increase or reduce exposure to underlying assets and result in greater fluctuations of the fund’s net asset value. Some derivatives give rise to increased potential for loss where the fund’s counterparty defaults in meeting its payment obligations.
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