Vanguard Eyes More Bond Indexes

o Vanguard Long-Term Corporate Bond Index Fund

o Vanguard Mortgage-Backed Securities Index Fund

All of the funds will be benchmarked to bond indexes from Barclays Capital.

“Vanguard has a quarter-century of experience in bond index management, and expanding our range of funds is a logical extension of our capabilities,” said Bill McNabb, Vanguard president and CEO. “Financial advisors and institutions want to construct broadly diversified fixed income portfolios, while retaining the ability to emphasize particular sectors or durations. Working in concert, our broad-based bond index funds and these new, more targeted funds can help to achieve this goal.”

The move is expected to complement the Valley Forge, Pa.-based firm’s actively managed fixed income funds, as well as its five existing bond index funds and ETFs.

In 1986, Vanguard introduced the industry’s first no-load bond index fund, the Vanguard Total Bond Market Index Fund (VBMFX). Today, VBMFX has around $60 billion in total assets, and the Total Bond Market ETF (BND) is among the industry’s top-15 best-selling ETFs.

While Vanguard’s ETFs have no minimum investment requirements, the company’s Signal Shares minimum investment for Vanguard Financial Advisor Services clients is $5 million per fund in aggregate at the firm level and $1 million per plan for employee benefit assets. Institutional shares are available to companies and organizations with account balances of $5 million or more.

Over the past 18 months, stock and bond indexing has gained market share as investors recognize the potential benefits of the approach’s low costs and broad diversification. So far this year, Vanguard has garnered more than $70 billion of net new cash flow to long-term funds through July 2009.