Vanguard unveils low-cost active bond fund

Low cost fundVanguard says it has extended price competition to bond funds and has launched its first low-cost, actively managed global credit bond fund in the UK.

The Vanguard Global Credit Bond Fund will invest in a portfolio of global credit bonds including high quality bonds from corporate issuers, government agencies and also supranational organisations around the world.

The new fund costs less than all active retail funds offered in the global credit bond category in the UK, Vanguard said. It will carry an ongoing charge figure of 0.35% for investor share classes, and 0.30% for institutional share classes.

The firm believes bonds can play a critical role as a diversifier in investors’ portfolios despite the low-yield environment.

Paul Malloy, head of fixed income for Vanguard in Europe, said: “The case for investing in high quality, liquid global credit bonds is compelling as it can offer a reasonable income compared with other bond and equity income strategies.” 

He added: “Another important element is the universe the fund will invest in will typically have lower volatility than high yield bonds or equities, helping to offset a portfolio’s return volatility. Investors should also pay close attention to costs, as the impact of fees is amplified in a low-yield market environment.”

The fund will be actively managed by Vanguard’s fixed income group, which has over $1.2 trillion (€1 trillion) in assets under management.

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