New short-duration fixed income ETF from Vanguard

23 May 2018 | Topical insights

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ETF

If you are concerned about the potential impact of rising interest rates on your bond portfolio[s], you’ll be interested in the latest addition to our fixed income ETF range.

Investment grade corporate debt exposure

The Vanguard USD Corporate 1-3 Year Bond UCITS ETF is designed to give investors exposure to short-dated investment grade corporate debt denominated in US dollars. Its benchmark is the Bloomberg Barclays Global Aggregate Corporate USD Index 1-3 Year Index.

Vanguard’s experienced investment team and long history of indexing success mean that investors can expect the ETF to track its benchmark index tightly, delivering a similar risk and return profile.

It is listed on the Irish Stock Exchange, with cross-listings in London (GBP and USD, Zurich (CHF) and Frankfurt (EUR).

Efficient duration management

Increasing exposure to shorter maturity bonds (1-3 year) can lower duration in your/your clients’ portfolios, whilst lowering interest rate risk.

Low cost

With an ongoing charges figure (OCF) of just 0.15%, this ETF continues our track record of offering access to core markets at low cost, helping investors to keep more of their returns.

Comprehensive range

This launch complements our existing fixed income range, bringing our offering to 7 UCITS ETFs and 15 mutual funds spanning government, corporate and emerging market bonds.

If you would like more information on our bond range, please visit the product page.

Investment risk information:

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing.

The fund may invest in financial derivative instruments that could increase or reduce exposure to underlying assets and result in greater fluctuations of the fund’s net asset value.

Some derivatives give rise to increased potential for loss where the fund’s counterparty defaults in meeting its payment obligations.

Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds.

The fund invests in securities which are denominated in different currencies. The value of these investments may fall or rise as a result of change in exchange rates.

Please also read the risk factors section in the prospectus which is available on the Vanguard website.

Other important information:

This article is for professional investors as defined under the MiFID II Directive only. In Switzerland for institutional investors only. Not for public distribution.

The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of [units/shares] of, and the receipt of distribution from any investment.

The Manager of Vanguard Funds plc is Vanguard Group (Ireland) Limited. Vanguard Investments Switzerland GmbH is a distributor of Vanguard Funds plc in Liechtenstein and Switzerland. Vanguard Funds plc has been authorised by the Central Bank of Ireland as a UCITS. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisors on the implications of making an investment in, and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

Vanguard Funds plc has been approved for distribution in and or from Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). The Representative and the Paying Agent in Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich. Copies of the Articles of Incorporation, KIID, Prospectus, Declaration of Trust, By-Laws, Annual Report and Semiannual Report for these funds can be obtained free of charge in local languages from the Swiss Representative or from Vanguard Investments Switzerland GmbH via our website https://global.vanguard.com/.

For further information on the fund’s investment policy, please refer to the Key Investor Information Document ("KIID").

The KIID and the Prospectus for this fund is available from Vanguard via our website https://global.vanguard.com/.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS® is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited ("BISL") (collectively, "Bloomberg"), or Bloomberg's licensors own all proprietary rights in the Bloomberg Barclays Indices.

The products are not sponsored, endorsed, issued, sold or promoted by “Bloomberg or Barclays”. Bloomberg and Barclays make no representation or warranty, express or implied, to the owners or purchasers of the products or any member of the public regarding the advisability of investing in securities generally or in the products particularly or the ability of the Bloomberg Barclays Indices to track general bond market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the products with respect to any person or entity. Bloomberg’s only relationship to Vanguard and the products are the licensing of the Bloomberg Barclays Indices which are determined, composed and calculated by BISL without regard to Vanguard or the products or any owners or purchasers of the products. Bloomberg has no obligation to take the needs of the products or the owners of the products into consideration in determining, composing or calculating the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the products to be issued. Neither Bloomberg nor Barclays has any obligation or liability in connection with the administration, marketing or trading of the products.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority. In Switzerland, issued by Vanguard Investments Switzerland GmbH.

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