You are here: Home - Investing - Experienced Investor - News -

Passive giant launches active fixed income fund

Written by:
Tracking fund giant Vanguard has launched its first low-cost, actively managed global credit bond fund in the UK.

The fund will invest in a portfolio of corporate bonds around the globe. Corporate bonds are bonds issued by companies. If all goes well, the investor receives an interest payment and their money back at the end. The fund will also invest in some government bonds and supranational organisations (such as the World Bank).

The fund has an ongoing charge figure of 0.35%, the cheapest of any active retail fund in the global credit bond category in the UK. Vanguard is well-known as a provider of tracker funds – funds that track an index – but this fund will be managed actively by a team within the group.

The top-yielding fund in the IMA Global Bond sector is the Templeton Global Total Return fund with a yield of 5.6%. The average fund is up 4.1% over one year and 19.4% over three years. However, there are concerns that bonds will not fare as well in an environment where interest rates are rising.

Paul Malloy, head of fixed income for Vanguard in Europe, said, “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. 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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Bank of England holds base rate at 0.25%

The Bank of England’s Monetary Policy Committee (MPC) voted to hold the base rate at 0.25%, leading the pound to...