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Vanguard intends to introduce two new active fixed income funds: Vanguard Core-Plus Bond Fund and Vanguard Multi-Sector Income Bond Fund.
The funds are designed to meet the needs of clients seeking actively managed “core” and “satellite” bond portfolios, the US firm said.
Core-Plus Bond will consist of a broadly diversified portfolio invested primarily in Treasury, mortgage-backed, and other US investment-grade securities. In addition, the fund may invest beyond the US investment-grade bond market in areas such as high-yield corporate securities and emerging markets debt of all credit quality ratings. Core-Plus Bond will be differentiated from Vanguard Core Bond Fund in its incremental flexibility across higher-alpha potential sectors, particularly in its greater exposure to high-yield and emerging markets.
The fund will have an estimated expense ratio of 0.30 per cent for Investor Shares and 0.20 per cent for Admiral Shares, compared with an average expense ratio of 0.48 per cent for industry peers.
The Multi-Sector Income Bond will be mainly exposed to US investment-grade securities, US high-yield corporate securities, and emerging markets debt of all credit quality ratings. It will have an estimated expense ratio of 0.40 per cent for Investor Shares and 0.30 per cent for Admiral Shares, compared with an average expense ratio of 0.98 per cent for industry peers, the firm said.
Vanguard expects to make its Core-Plus Bond available to investors in the fourth quarter of 2021 and the Multi-Sector Income Bond available for public investment at a later date, it said.