Vanguard launches fresh attack in price war

Vanguard has launched a new offensive against competitors in the ongoing fund price war with the introduction of its first actively-managed bond fund in the UK.

The Vanguard Global Credit Bond Fund has an ongoing charge figure (OCF) of 0.35% for investor share classes and 0.30% for institutional classes.

The asset manager claims this is less than all active retail funds offered in the global credit bond fund category in the UK. This, it added, will help investors keep more of their returns in a low-yield environment.

The fund will be actively managed by Vanguard’s Fixed Income Group, which runs $1.2trn globally. It will invest in a diversified portfolio of high quality bonds from corporate issuers and government agencies around the world.

It is Vanguard’s first actively managed bond fund available to UK investors. It follows the launch last year of four low-cost actively managed funds in the UK: two global equity, an emerging market equity, and a balanced global equity and fixed income fund.

Paul Malloy, head of fixed income for Vanguard in Europe, said: “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.

“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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