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Vanguard launches EM govt bond index fund

Vanguard Emerging Markets Government Bond Index Fund is intended for investors who are willing to accept the higher risk of emerging markets bonds relative to the collective fixed income market

May 20, 2013 3:54 IST | India Infoline News Service
Vanguard has announced the introduction of Vanguard Emerging Markets Government Bond Index Fund, the company’s first international fixed income offering available to US investors.

The fund—launched on 14th May—is now accepting investments during a subscription period that will extend through the end of business on May 30, 2013.  During this period, the fund will invest in money market instruments as it accumulates sufficient assets to construct a representative, diversified portfolio.

The fund’s ETF shares (VWOB) are scheduled to begin trading in early June.
Following the subscription period, the fund will seek to track the Barclays USD Emerging Markets Government RIC Capped Index. The fund will invest solely in US dollar-denominated emerging markets bonds.

The benchmark includes approximately 560 government, agency, and local authority issuers. When necessary, the index will limit weightings of individual debt issuers to meet IRS investment company diversification requirements.

The expense ratios for the ETF, Investor, Admiral, and Institutional Shares of Vanguard Emerging Markets Government Bond Index Fund will range from 0.3% to 0.5%.

The fund will assess a purchase fee of 0.75% on all non-ETF shares to help offset the higher transaction costs associated with buying emerging markets bonds.

Vanguard Emerging Markets Government Bond Index Fund is intended for investors who are willing to accept the higher risk of emerging markets bonds relative to the collective fixed income market. Vanguard suggests that only investors with well-diversified, balanced investment programs consider the fund for a portion of their overall holdings.

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services.

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