VALLEY FORGE, PA (December 6, 2017)—Vanguard today announced that Vanguard Emerging Markets Bond Fund is available for investment. The new offering expands Vanguard’s U.S.-domiciled active fixed income fund roster to 25 funds and complements the firm’s existing emerging markets bond index offering.
A low-cost active approach to emerging markets bonds
The new fund is designed to offer financial advisors and institutions the potential for additional diversification, along with potentially higher returns that can accompany the considerable volatility associated with emerging markets debt.
The fund’s investment advisor, Vanguard Fixed Income Group, seeks to outperform the JP Morgan EMBI Global Diversified Index by investing in a broadly diversified portfolio of debt issued by emerging market governments and government-owned enterprises, with a majority of its assets either denominated in, or hedged back to, the U.S. dollar. Emerging market countries include countries whose economies and capital markets are less developed, which includes most countries except for Australia, Canada, Japan, New Zealand, the United States, the United Kingdom, and most European Monetary Union countries. The Fund also has the ability to invest, on a limited basis, in out-of-benchmark emerging market sectors, such as emerging market corporate bonds and local currency bonds. The Fund’s duration, a measure of interest rate risk, is expected to be within one year of its benchmark.
“Emerging market debt is a well-established asset class offering credit exposure and diversification that is complementary to corporate and high yield bonds,” said John Hollyer, global head of Vanguard Fixed Income Group. “The Fund provides investors with low-cost, broad exposure to emerging fixed income markets.”
The Emerging Markets Bond Fund is among the lowest-cost actively managed funds in its category,1 with the Fund’s Investor and Admiral shares (VEMBX and VEGBX) featuring expense ratios of 0.60% and 0.45%2, respectively.
The new actively managed fund serves as a complement to Vanguard’s corresponding index and ETF offering, Vanguard Emerging Markets Government Bond Index Fund, which was introduced in 2013. Investors now have a choice between both active and passive products that provide access to emerging market debt, which may be suitable to some investors based on their goals, preferences, and tolerance for risk.
A renewed focus on fixed income
“Our emerging markets credit team has demonstrated their deep expertise in this growing segment of the global fixed income landscape,” said Paul Jakubowski, Head of Credit, Vanguard Fixed Income Group. “We look forward to continuing to build out our fixed income team and capabilities, inclusive of portfolio management, trading, and credit research around the globe.”
Mr. Jakubowski noted that Vanguard currently manages $4.5 billion in emerging markets bond assets in its active fixed income funds, and has been investing in the asset class as a sub- allocation across Vanguard’s active credit lineup since 2013.
Daniel Shaykevich is the portfolio manager who is responsible for day-to-day oversight of the portfolio. Mr. Shaykevich joined Vanguard in 2013 and has worked in investment management since 2001. He is supported by a team of dedicated emerging market investment professionals in the United States, London, and Hong Kong.
In addition to the new fund, Vanguard added to its actively managed bond fund lineup over the past several years by launching Vanguard Ultra-Short-Term Bond Fund in 2015 and Vanguard Core Bond Fund in 2016. Today, the two funds have $4.2 billion in aggregate assets under management.
Vanguard has also extended its bond index and ETF lineup, introducing Vanguard Short-Term Inflation-Protected Securities Fund in 2012; Vanguard Total International Bond Index Fund/ETF
and Vanguard Emerging Markets Government Bond Index Fund/ETF in 2013; Vanguard Tax- Exempt Bond Index Fund/ETF in 2015; and Vanguard Total Corporate ETF in 2017.
A global fixed income leader
Vanguard Fixed Income Group is one of the largest bond fund managers in the world with more than $1.3 trillion under management, across both index and actively managed funds. Since its inception in 1981, the group has continually expanded its capabilities to manage both active and indexed domestic and international bonds, municipal bonds, money market securities, and stable value assets.
Vanguard is one of the world’s largest investment management companies. As of October 31, 2017, Vanguard managed $4.8 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 376 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
Asset figures as of October 31, 2017, unless otherwise noted.
1 Source: Morningstar.
2 As of December 6, 2017.
For more information about Vanguard funds and ETFs, visit vanguard.com or call 800- 662-7447 to obtain a prospectus or, if available, a summary prospectus. 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 are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
Bonds based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.
The Emerging Markets Government Bond Fund and ETF are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. The Fund and ETF seek to track the performance of an index that measures the investment return of dollar-denominated bonds issued by governments of emerging market countries (including government agencies and government-owned corporations). Because the Fund and ETF invest only in U.S. dollar- denominated bonds, U.S.-based shareholders are not subject to currency risk, although if an issuer’s home currency declines relative to the U.S. dollar, it could negatively affect perceptions of the issuer’s ability to make payments, which could cause the issuer’s bonds to decline in value.
The Emerging Markets Government Bond Fund and ETF are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by foreign governments, and emerging market risk, which is the chance that bonds of governments located in emerging markets will be substantially more volatile and substantially less liquid that the bonds of governments located in more developed foreign markets.
Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.