Vanguard launches short-term bond index fund

Bond indicesVanguard Asset Management has launched a global short-term bond index fund to UK investors, describing it as a product that can help control interest rate risk.

The Vanguard Global Short-Term Bond Index Fund will invest across geographies and assets, including governments, investment grade corporates and ex-US securitised mortgages.

With a total expense ratio (TER) of just 0.15% for the institutional US sollar share class, Vanguard says its fund continues Vanguard’s philosophy of offering low-cost access to core asset classes. 

The fund will track the Barclays Global Aggregate 1-5 Years ex-US MBS Float Adjusted Bond Index.

BlackRock, the asset manager, recently said 2013 had seen a big trend in the exchange-traded product industry for assets flowing into funds focusing on shorter maturity bonds.

“Investors have been yanking money out of broad maturity funds and ploughing it into short duration and floating rate funds as they seek protection from higher interest rates,” its ETP Landscape report says.

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