Vanguard Active fixed income

Our active fixed income offering is founded on a commitment to deliver value to investors by focusing on consistent, long-term outperformance and reducing downside risk¹. Vanguard’s investment approach will remain true to label and always put our clients’ best interests first.

Consistency is key

We’re committed to giving bond investors the best chance of investment success. We believe a long-term approach, based on genuine security selection, to deliver consistent returns can help investors and our clients meet their objectives. We began managing active bond portfolios 35 years ago – today we are one of the largest active fixed income managers in the world, with more than $1.6tn² in active fixed income assets globally.

At Vanguard, we take a consistent approach built on: diversified sources of alpha, robust risk management and smart risk-taking. We put a strong emphasis on rigorous portfolio construction, driven by analysis, derived from collaborative, fundamental research. Our team of over 180 fixed income professionals, including more than 60 global credit research analysts, makes ours one of the largest fixed income teams in the market.

Core philosophy

We have long believed in providing active fixed income products that aim to deliver consistent alpha-generating opportunities. This belief steered the Vanguard fixed income group to launch its first active funds in the 1980s.

Our approach to active fixed income investing is underpinned by a set of four pillars:

1. True to label

We are committed to transparency so that our clients know what to expect. That means that our funds have a similar risk and asset-class profile to the assets they represent, allowing the flexibility to add value while staying true to the character of the asset class.

2. Risk-adjusted returns

Diversified sources of alpha, robust risk management and intelligent risk-taking drive consistent alpha generation.

3. Our talent, process and culture

The optimum combination of these three factors maximises value for our clients, driving better long-term results.

4. Keeping costs low

Our scale and client-owned structure³ allows us to keep our costs low and helps to deliver competitive net alpha without taking undue risk, meaning our investors keep more of their return.

Vanguard Global Credit Bond Fund

A core fixed income portfolio, designed for outperformance with a bottom-up approach to security selection.

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Vanguard Emerging Markets Bond Fund

An emerging markets portfolio designed to outperform by identifying diversified sources of alpha while avoiding the potential for significant drawdown.

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The foundations that aim to deliver positive outcomes for our clients

Team culture

Vanguard’s team culture with specialisation and clear accountability focuses on striving for better long-term outcomes for our clients.

Diversified sources of alpha

Our high-conviction ideas and reduced dependence on macro views can provide consistent outperformance.

Security selection

Emphasis on rigorous research and deep understanding of individual issuers helps optimise security selection.

Risk management

Independent and integrated risk management reduces the likelihood of large drawdowns, so our clients keep more of their returns.

Scale

Our desks around the world give us 24-hour access to global markets but also deep local knowledge.

Vanguard’s business model

Our scale and client-owned structure³ help deliver quality and value for our bond clients.

ESG integration

Environmental, social and governance (ESG) risk is one of the core elements that make up our view of a corporate bond issuer.

Nov 28, 2023

3 min

Navigating global credit markets in a downturn

Vanguard’s corporate bond experts share their strategies for active credit investors in an economic slowdown.

Nov 9, 2023

4 min

Fixed income update: Yield curves steepen in October

The key themes in global bond markets over the past month.

Nov 1, 2023

4 min

What ‘higher for longer’ means for active bond investors

Vanguard’s top bond experts share their views on what ‘higher for longer’ means for global fixed income markets, and where they’re looking to add value in the months ahead.

Oct 22, 2023

4 min

Why the euro area is proving less resilient than the US

The euro area and US central banks have applied similar monetary policy tightening over the past 18 months with distinctly different results. We see three key reasons why.

¹ Past performance is not a reliable indicator of future returns. Source: Lipper, a Thomson Reuters Company. Data as at 31st December 2022. 87% of our active bond funds globally outperformed their peer group over the past 5 years. 98% of our active bond funds globally outperformed their peer group over the past 10 years. Results will vary for other time periods. Only funds with a minimum five- or ten-year history, respectively, were included in the comparison.

² Source: Vanguard. Data as at 30 September 2023.

³ The Vanguard Group Inc. (VGI) is owned by Vanguard’s US-domiciled mutual funds and ETFs. While VGI’s ownership structure can’t be replicated outside of the US, we believe that this unique mutual structure aligns Vanguard’s interests with those of our investors globally.

Important risk information:

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

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

Vanguard Active fixed income