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Vanguard Launches Another Actively Managed Bond Fund

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A Vanguard booth at a trade show. (Photo: AP)

Vanguard has added another fund to its roster of actively managed funds, which comprise almost one-quarter of its $5.3 trillion in assets under management.

The Vanguard Global Credit Bond Fund (VGCAX) joins the firm’s roster of 25 actively managed fixed income funds. It invests in U.S. and international investment-grade credit markets, split roughly 2 to 1 between U.S. dollar-dominated and non U.S. dollar-denominated bonds, and the majority of its non-dollar-denominated portfolio is hedged to the U.S. dollar to preserve the fund’s credit focus.

“The new Global Credit Bond Fund is an attractive option for investors seeking an active core holding with diversified, global exposure to credit,” said John Hollyer, global head of the Vanguard Fixed Income Group, in a statement.

The fund uses a fundamental approach to identify relative value based on security selection, sector allocation and interest rate views and seeks relative value across multiple countries, yields, currencies, credit ratings and cost bases.

The new fund has two share classes: Investor Shares, which requires a $3,000 investment and has an expense ratio of 0.35%, and Admiral Shares, with a $50,000 minimum and expense ratio of 0.25%. Both fees are well below the 0.65% average for funds included under Morningstar’s world bond category.

Daniel Shaykevich, a Vanguard principal and co-head of its Fixed Income Group’s Emerging Markets and Sovereign Debt team, and Samuel C. Martinez, CFA, co-head of the Structured Products Team in the Fixed Income Group are the portfolio managers, and Vanguard’s Fixed Income Group serves as the fund’s advisor.

Despite its reputation as a passive fund giant, Vanguard not only has $1.3 trillion in assets invested in actively managed funds but its first fixed income fund, introduced in 1982, was an actively managed fund; its first bond index fund followed four years later.


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