Vanguard files for 'ultra' short-term bond fund

Offering will restrict maturity of holdings to one year.
DEC 10, 2014
The Vanguard Group Inc. filed a registration statement today with the Securities and Exchange Commission for its Ultra-Short-Term Bond Fund, which is expected to be available in the first quarter of 2015. “The fund had been under consideration for some time and it's basically intended to round out Vanguard's taxable bond funds in its fixed-income lineup,” said David Hoffman, a spokesman for Vanguard. Company executives said the fund will invest in high-quality bonds, including a combination of money market, government and investment-grade corporate securities. By restricting maturity of the bonds in the fund to one year, “it will afford investors the opportunity for further duration diversification,” Vanguard CEO Bill McNabb said in a statement. Mr. McNabb cautioned investors against using it as a “money market fund substitute.” The fund is expected to carry an Aa investment grade and will be available in two share classes. Investor Shares, with an estimated expense ratio of 0.2%, will require a minimum initial investment of $3,000. Admiral Shares, with an estimated expense ratio of 0.12%, will require a minimum initial investment of $50,000. Senior portfolio managers, Gregory S. Nassour and David Van Ommeren, will oversee the new fund. Mr. Nassour currently manages multiple investment-grade bond funds and Mr. Van Ommeren is co-leader of the firm's asset-backed and commercial-mortgage-backed securities team. Overall, Vanguard manages nearly $2.8 trillion in U.S. mutual fund assets, including nearly $802 billion in fixed income. Through Oct. 31, Vanguard's U.S.-based fixed income products have taken in nearly $59 billion this year, including a record $10.3 billion in October.

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