Vanguard has filed a registration statement with the Securities and Exchange Commission to offer exchange-traded shares for four existing bond index funds: Vanguard Total Bond Market Index Fund, Vanguard Short-Term Bond Index Fund, Vanguard Intermediate-Term Bond Index Fund, and Vanguard Long-Term Bond Index Fund. The four bond ETFs will be managed by the Vanguard Fixed Income Group, which oversees $310 billion in assets, including $65 billion in bond index fund assets. “These four Vanguard bond ETFs will provide investors with broadly diversified exposure to the entire U.S. bond market and discrete segments of the market at an extremely low cost of 0.11%,” said Vanguard CIO Gus Sauter, in a statement.
The new ETFs are structured as separate share classes of existing mutual funds. Vanguard Total Bond Market ETF will be a share class of the $40 billion Vanguard Total Bond Market Index Fund, which tracks the performance of the market-weighted Lehman Brothers Aggregate Bond Index and holds nearly 2,800 corporate, treasury, agency, and mortgage securities. The other three bond ETFs will be based on separate shares of existing Vanguard bond index funds that target specific maturity segments of the domestic bond market. Vanguard’s ability to offer bond ETFs is contingent on the SEC’s approval.
Vanguard launched its first ETF in 2001 and over the past five years introduced 27 ETF offering. In December 2006, Vanguard filed a registration statement with the SEC for Vanguard FTSE All-World ex USA Index Fund, an international equity fund that will invest in developed and emerging markets. The fund will offer ETF shares and is expected to be available in the first quarter of this year.