OREANDA-NEWS. December 24, 2015. Vanguard filed a registration statement with the Securities and Exchange Commission for the proposed launch of Vanguard Core Bond Fund during the first quarter of 2016.

The actively managed fund will be managed by Vanguard Fixed Income Group and will seek to provide total return while generating a moderate level of current income. It will invest in a broadly diversified portfolio of bonds, including Treasury, government, and corporate securities of varying yields and durations.1

"Vanguard Core Bond Fund will share many characteristics with Vanguard Total Bond Market Index Fund, including low-cost exposure to high-quality bonds, broad diversification, and an intermediate-term maturity," said Vanguard Chairman and CEO Bill McNabb. "Unlike its index sibling, however, the new fund will be actively managed, employing a disciplined, risk-controlled approach that will seek to outperform through security selection, sector allocation, and, to a lesser extent, duration decisions."

The fund will offer two low-cost share classes: Admiral™ Shares, with an estimated expense ratio of 0.15%, and Investor Shares, with an estimated expense ratio of 0.25%. The average expense ratio of funds in the Morningstar intermediate-term bond category was 0.84% as of September 30.

Senior portfolio managers Gregory S. Nassour, CFA, Brian Quigley, and Gemma Wright-Casparius will serve as co-portfolio managers. With 71 total years of investment management experience in aggregate, the three managers currently oversee multiple investment-grade2 corporate bond, Treasury, and government bond funds.

The fund is the second low-cost actively managed fixed income fund announced recently by Vanguard. In February 2015, the company launched Vanguard Ultra-Short-Term Bond Fund, whose expense ratios as of the fund's current prospectus are 0.12% for Admiral Shares and 0.20% for Investor Shares.

Vanguard filed an additional registration statement today for the proposed launch of another actively managed bond fund, Vanguard Emerging Markets Bond Fund, which will focus on debt securities from non-developed global markets. It will also be managed by Vanguard Fixed Income Group and will not be immediately available for public investment.

Vanguard Fixed Income Group is one of the world's largest fixed income managers with approximately \\$900 billion in assets under management globally, including approximately \\$260 billion in actively managed bond funds, \\$450 billion in index funds and ETFs, and \\$180 billion in money market funds.

Notes:

  • All asset figures are as of November 30, 2015, unless otherwise noted.
  • A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
  • For more information about Vanguard funds, visit institutional.vanguard.com or call 800-523-1036 to obtain a prospectus or, if available, the summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
  • All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
  • Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
  • Securities of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

1Duration is a measure of the sensitivity of bond—and bond mutual fund—prices to interest rate movements.
2Investment grade is a rating that indicates that the risk of default of the bonds in the portfolio is relatively low.