US giant Vanguard launches low-cost active bond fund in the UK

US asset management giant Vanguard has launched its first low-cost and actively managed global credit bond strategy in the UK.

The Vanguard Global Credit Bond fund will consist of a diversified portfolio of global credit bonds including high quality bonds from corporate issuers, government agencies and also supranational organisations accross the world.

The strategy joins the four other low-cost active funds launched in the country by Vanguard last year. The charging fee will be 0.35% for investor share classes, and 0.30% for institutional share classes.

The fund will be run by Vanguard’s Fixed Income Group, that had over US$1.2trn (€1trn) in assets under management as at 31 July 2017.

Paul Malloy, head of fixed income for Vanguard in Europe, commented: “The case for investing in high quality, liquid global credit bonds is compelling as it can offer a reasonable income compared with other bond and equity income strategies.

‘Lower volatility’

“Another important element is the universe the fund will invest in will typically have lower volatility than high yield bonds or equities, helping to offset a portfolio’s return volatility. Investors should also pay close attention to costs, as the impact of fees is amplified in a low-yield market environment.”

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