Vanguard has expanded its active fixed income fund lineup with a new emerging markets bond fund.
The Vanguard Emerging Markets Bond Fund invests in a broadly diversified portfolio of debt issued by emerging market governments and government-owned enterprises, with a majority of its assets either denominated in, or hedged back to, the U.S. dollar.
The fund’s investment advisor is Vanguard Fixed Income Group, which has more than $1.3 trillion under management across both index and actively managed funds.
Vanguard currently manages $4.5 billion in emerging markets bond assets in its active fixed income funds, and has been investing in the asset class as a sub-allocation across Vanguard’s active credit lineup since 2013.
“Emerging market debt is a well-established asset class offering credit exposure and diversification that is complementary to corporate and high-yield bonds,” John Hollyer, global head of Vanguard Fixed Income Group, said in a statement. “The fund provides investors with low-cost, broad exposure to emerging fixed income markets.”
Vanguard considers emerging market countries as countries whose economies and capital markets are less developed – which includes most countries except for Australia, Canada, Japan, New Zealand, the United States, the United Kingdom and most eurozone countries.
The fund also has the ability to invest, on a limited basis, in out-of-benchmark emerging market sectors, such as emerging market corporate bonds and local currency bonds.
The fund’s duration, a measure of interest rate risk, is expected to be within one year of its benchmark.
The Emerging Markets Bond Fund is a low-cost actively managed fund, with the fund’s Investor and Admiral shares (VEMBX and VEGBX) featuring expense ratios of 0.60% and 0.45%,respectively.
The new actively managed fund serves as a complement to Vanguard’s corresponding index and ETF offering, Vanguard Emerging Markets Government Bond Index Fund, which was introduced in 2013.
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