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Rating:Four New Fixed Income ETFs Hit the Market Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, April 10, 2007

Four New Fixed Income ETFs Hit the Market

News summary by MFWire's editors

Four Vanguard bond ETFs, featuring category-leading low expense ratios of 0.11% (Source: Morningstar), will begin trading on the American Stock Exchange today at 9:30 a.m.

The new Vanguard Bond ETFs™, which are uniquely structured as separate share classes of established, broadly diversified bond index funds, represent Vanguard’s first exchange-traded fixed income portfolios. Vanguard, the mutual fund industry’s largest index fund manager (Source: Morningstar), introduced its first stock ETF in 2001 and oversees a carefully defined series of 28 domestic and international equity ETFs.

“We are pleased to expand our ETF offerings to bonds, bringing additional choice to investors and cost competition to the ETF marketplace,” said Vanguard Chief Investment Officer Gus Sauter, who noted that Vanguard’s ETF assets more than doubled over the past year to $27 billion. “Vanguard ETFs are gaining broader appeal among investors because of their low costs, broad diversification, and precise tracking.”

Vanguard introduced the first bond index fund for individual investors more than 20 years ago with the launch of Vanguard® Total Bond Market Index Fund in 1986. Today, the nearly $44 billion fund is one of the largest bond mutual funds in the country, and was the top-selling fixed income fund in 2006 (Source: Strategic Insight).

Vanguard Bond ETFs provide efficient exposure to the broad U.S. bond market as represented by the Lehman Brothers Aggregate Bond Index, as well as to discrete segments of the market, as shown in the table below.

Vanguard Bond ETF (ticker)




Ratio Vanguard Total Bond Market ETF (BND) Lehman Brothers

Aggregate Bond Index 2,581 0.11%

Vanguard Short-Term Bond ETF (BSV)

Lehman Brothers 1-5 Year Government/Credit Index 710 0.11% Vanguard Intermediate-Term Bond ETF (BIV)

Lehman Brothers 5-10 Year Government/Credit Index 850 0.11% Vanguard Long-Term Bond ETF (BLV)

Lehman Brothers Long Government/Credit Index 668 0.11% The four bond ETFs are managed by the Vanguard Fixed Income Group, which oversees $310 billion in assets, including $65 billion in bond index fund assets. In addition to an experienced management team, Vanguard's bond ETFs feature a novel structure as a share class of existing funds rather than as stand-alone funds or unit investment trusts. This structure provides for lower expense ratios through economies of scale and broader diversification among securities and issuers than competing products offer, resulting in the potential for greater credit replication and benchmark tracking.

Financial advisors seeking more information about Vanguard's ETFs and low-cost mutual funds can visit https://advisors.vanguard.com. The recently redesigned site features analysis tools and practice-management programs to help advisors better meet the changing needs of their clients. Advisors can also take courses online to earn continuing education credits to further their professional development and to stay abreast of industry developments and trends.

The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation’s second-largest mutual fund firm and a leading provider of company-sponsored retirement plan services. Vanguard manages more than $1.15 trillion in U.S. mutual fund assets, including $300 billion in employer-sponsored retirement plans. Vanguard offers more than 140 funds to U.S. investors and more than 40 additional funds in foreign markets.

All investments are subject to risk, which may result in loss of principal. Investments in bonds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss in a declining market.

For more information, visit www.vanguard.com, or call 800-662-7447 for Vanguard Funds and 800-522-5555 for Vanguard annuity products, to obtain fund and annuity contract prospectuses. Visit our website, call 800-992-8327, or contact your broker to obtain a product description and prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares can be bought and sold only through a broker (who may charge a commission) and cannot be redeemed with the issuing fund. The market price of Vanguard ETFs may be more or less than net asset value.

Vanguard assets and other data are as of February 28, 2007, unless otherwise noted.

Vanguard, Vanguard ETFs, Vanguard Bond ETFs are trademarks of The Vanguard Group, Inc. All other marks are the exclusive property of their respective owners.

U.S. Pat. No. 6,879,964 B2.

Vanguard Marketing Corporation, Distributor. 

Edited by: Erin Kello

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