The fund is managed on a hedged basis to help reduce the volatility created by currency movements and preserve the risk-return profile offered by the underlying asset class. In addition, it will help investors broadly diversify their fixed income allocation across different countries’ interest rate environments and across a global set of issuers.
Tracking the Barclays Global Aggregate 1-5 Years ex-US MBS float adjusted bond index, the fund will invest broadly across a global universe of securities including government, investment grade corporate, government related and securitised ex-US mortgage-backed securities.
Axel Lomholt, head of product for Vanguard’s International business, said:
“Not only do global short-term bonds provide stability and diversification, they also play a valuable role in protecting the downside risk of portfolios. The Vanguard global short-term bond index fund aims to serve that purpose by offering broad diversification, lower expected volatility compared to longer maturity global bond funds, and low-cost access.”
