Our approach to fixed income centres on delivering value to investors, whether it’s by tracking an index or generating long-term alpha.
Watch our video to learn more about fixed income at Vanguard.
Fixed income at Vanguard
At Vanguard, our mission to give investors the best chance of investment success is what sets us apart. We have the scale, experience and expertise to deliver value to investors through research-drivien bond selection and a long-term approach focused on time-tested performance.
Our specialist, global team of researchers, portfolio managers and traders collaborate to provide high-quality fixed income funds covering the key parts of the bond market that investors can depend on regardless of management style, region or market segment.
35+
years’ experience
$ 1.8
trillion AuM1
190
professionals1
A consistent approach
Vanguard has been managing fixed income portfolios for over 35 years. Today, we’re one of the largest bond managers in the world, with over $1.8 trillion in fixed income assets under management globally. From the start, we’ve been driven by an uncompromising commitment to consistency, which is why Vanguard investors should know exactly what to expect from our funds.
For our bond index funds and ETFs, that means broadly diversified beta exposures that offer the right balance between tracking efficiency, cost and risk management. And for our active fixed income funds, that means true-to-label products that derive alpha from genuine, bottom-up security selection across diversified sources, without taking excessive top-down directional risk.
Indexing: quality not commodity
We’ve built a sustainable, scaled and successful global index offering that’s based on an uncompromising commitment to quality, not commodity. We recognise that for our investors, quality is about long-term value as well as cost.
Active: consistent alpha generation
We focus on delivering consistent, long-term alpha generation with less downside risk2 Our investment approach is true-to-label and puts our investors’ interests first. Our scale keeps our costs competitive so we don’t have to take outsized risks to achieve out performance and we can increase risk strategically to capitalise on opportunities.
We meet our investors’ diverse risk and return requirements with our capabilities spanning active and index funds across the fixed income universe, from government bonds to corporate and emerging market debt.
We have one of the largest fixed income teams in the world, with over 190 fixed income professionals, including more than 50 global credit research analysts.
Our scale helps us keep costs low and deliver bond funds investors can rely on.
Our approach is consistent, regardless of location. Our global investment platform gives us 24-hour market access and allows our investors to benefit from our local expertise.
Trading desks in the US, the UK and Australia allow Vanguard to ‘pass the book’ globally as needed, allowing regional experts to make timely decisions locally.
Our trading and portfolio management functions are integrated into one holistic team, enabling enhanced trading value. Credit analysts and traders are all sector- and country-focused specialists.
Our fixed income group draws on a dedicated team of 50+ credit research analysts, each responsible for covering up to 60 issuers in their specialist sectors.
As one of the world’s largest asset managers, we enjoy excellent access to the company management of corporate bond issuers and have a deep understanding of the issuer landscape.
A sustainable approach
Avoiding exposure to companies through exclusionary ETFs
For Vanguard’s ESG fixed income index products launched since 2020, we have chosen the Bloomberg MSCI Global Corporate Float-Adjusted Liquid Bond Screened Index. Bloomberg works with MSCI, which identifies the securities for exclusion from the benchmark at an issuer level.
Allocating capital through active funds
Active fixed income is primarily managed internally at Vanguard with ESG risk assessment analysed by our in-house credit research team. For internally managed funds, Vanguard’s Fixed Income Group integrates ESG into its investment process by systematically assessing the financial materiality of ESG risk, to complement standard credit assessment.
Our fixed income product range
1 Source: Vanguard as at 31 December 2021.
2 The percentage of Vanguard funds globally in each category that outperformed the average return of their peer group of mutual funds. For the five-year period, 44 of 48 bond funds Vanguard funds outperformed their peer group averages. For the ten-year period, 38 of 44 bond funds Vanguard funds outperformed their peer group averages. Results will vary for other time periods. Only funds with a minimum five-, or ten-year history, respectively, were included in the comparison. Source: Lipper, a Thomson Reuters Company. Data as at 30 December 2020.
Important risk information:
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
For further information on risks please see the “Risk Factors” section of the prospectus on our website.