Key takeaways

• The Vanguard U.K. Short-Term Gilt Index Fund allows investors to take advantage of the attractive yields offered by UK government bonds, while helping to mitigate volatility.

• With the launch of this fund, we now offer a full range of UK government bond products across the duration spectrum for investors looking to tailor their portfolios with gilt exposures.

• Having launched our first index mutual fund for individual investors in 1976, this new offering reflects Vanguard’s decades of experience in managing index funds.

Add a buffer against volatility with short-term gilts

We continue to see an investment landscape marked by uncertainty. Most notably, we expect increased scrutiny over fiscal sustainability globally, and it remains unclear what impact tariffs will have on economies around the globe. In this environment, many investors are looking for ways to manage the risk in their portfolios. The new Vanguard U.K. Short-Term Gilt Index Fund offers a way to take advantage of the attractive yields on offer from UK government bonds while helping to mitigate volatility in a market environment of heightened uncertainty. 

Although we have started to see developed-market government bond yield curves normalise, investors can still capture attractive risk-adjusted returns in front-end gilts. Moreover, the coupon rate available on short-duration UK government bonds (2.85%) is not materially different from that available on long-duration gilts (2.87%) – which makes targeted short-duration gilt exposure useful for investors seeking income without taking on additional duration¹.

Filling out our range of UK fixed income exposures

With this launch, we now offer a comprehensive suite of duration options for investors seeking UK government bond exposure – spanning short-, medium- and long-term duration building blocks to meet the specific needs in your portfolio.

To complement our new short-duration gilt fund, we also offer a UK short-duration investment-grade bond fund, which allows investors to capture the benefits of high-quality sterling-denominated credit without the added duration risk.

For investors seeking income, our UK investment-grade bond index fund may be of interest, offering a yield to maturity of more than 5%². Additionally, with approximately five years of duration, investors can still capture duration benefits without the potential risk of interest rate volatility impacting returns.

In addition, for investors looking to increase the duration in their portfolios—for example to potentially provide a shock absorber against recession risk, or simply from a desire to target points further out on the yield curve—we offer a number of index exposures to choose from, spanning intermediate- and long-duration UK government bonds, as well as UK inflation-linked gilt exposure, as summarised in the graphic below.

Refine your portfolio with Vanguard’s fixed income exposures

A table showing the suite of Vanguard index fund bond exposures available to investors.

Source: Vanguard.

50 years of experience managing index funds

Vanguard is a pioneer of index funds, having developed the first ever index mutual fund for individual investors in 1976. Low-cost and simple by nature, index investing can provide the ideal foundation for almost any investment portfolio, helping to achieve broad diversification.

We've built an enduring, scaled and successful global index offering that is based on an uncompromising commitment to quality. We also recognise that, although it's important, quality isn't just about cost, it's about long-term value.

With our uncomplicated tracking methodology using physical replication, we aim to consistently provide some of the tightest tracking in the field of index funds. Matching assets to their corresponding weights in the benchmark offers a purer form of index investing, thereby enhancing tracking, reducing counterparty risk and improving transparency.

¹ Source: Bloomberg, as at 31 May 2025. Benchmarks are the Bloomberg UK Gilt 1-5 Year Float Adjusted Bond Index and the Bloomberg UK Government Float Adjusted Bond Index.

² 5.14% as of 30 April 2025. Source: Bloomberg.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

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 use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index.

For further information on risks please see the “Risk Factors” section of the prospectus on our website.

Important information

This is directed at professional investors and should not be distributed to, or relied upon by retail investors.

For further information on the fund's investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIID for this fund is available, alongside the prospectus via Vanguard’s website.

This is designed for use by, and is directed only at persons resident in the UK.

The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares and /or units of, and the receipt of distribution from any investment.

Vanguard Investment Series plc has been authorised by the Central Bank of Ireland as a UCITS and has been registered for public distribution in certain EEA countries and the UK. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisers on the implications of making an investment in, and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

The Manager of Vanguard Investment Series plc is Vanguard Group (Ireland) Limited. Vanguard Asset Management, Limited is a distributor of Vanguard Investment Series plc.

The Authorised Corporate Director for Vanguard Investments Funds ICVC is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard Investments Funds ICVC.

The Manager of the Ireland domiciled funds may determine to terminate any arrangements made for marketing the shares in one or more jurisdictions in accordance with the UCITS Directive, as may be amended from time-to-time.

For investors in UK domiciled funds, a summary of investor rights can be obtained and is available in English.

For investors in Ireland domiciled funds, a summary of investor rights can be obtained and is available in English, German, French, Spanish, Dutch and Italian.

The Central Bank of Ireland has granted authorisation for the Vanguard U.K. Government Bond Index Fund to invest up to 100% of net assets in different Transferable Securities and Money Market Instruments issued or guaranteed by any EU Member State, its local authorities, non-EU Member States or public international bodies of which one or more EU Member States are members. The Vanguard U.K. Government Bond Index Fund invests more than 35% of its scheme property in transferable securities and money market instruments issued or guaranteed by the UK.

The Vanguard U.K. Long Duration Gilt Index Fund invested more than 35% of its scheme property in transferable securities and money market instruments issued or guaranteed by the UK.

The Vanguard U.K. Inflation-Linked Gilt Index Fund invested more than 35% of its scheme property in transferable securities and money market instruments issued or guaranteed by the UK.

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

© 2025 Vanguard Asset Management Limited. All rights reserved.