Vanguard has launched its first actively managed fixed income fund in the UK.
The Global Credit Bond fund will carry a 0.35 per cent ongoing charge for retail investors and will target global credit bonds including high quality bonds from corporate issuers, government agencies and other organisations.
As first reported by Money Marketing in July, the fund will be managed by Vanguard’s existing in house fixed income team of 150 staff which runs $1.2trn (£900bn) assets globally.
The team will be supported by the risk management group.
When speaking to Money Marketing in July, Vanguard head of UK retail sales Neil Cowell said the active bond fund launch was “our obvious next move”.
The US asset management giant claims the new fund costs less than all active retail funds in the credit bond market in the UK.
Vanguard’s head of fixed income in Europe Paul Malloy says the fund’s low cost is intended to offset the current low-yield environment.
Malloy says: “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.
He adds: “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.”
In May 2016, Vanguard, which overseas nearly £5trn in assets, launched its first series of active funds for the UK market, managed both internally and through third party fund managers including Baillie Gifford and Wellington.