Our active fixed income offering is founded on a commitment to deliver value to investors by focusing on consistent, long-term alpha generation and reducing downside risk1. Whatever the market environment, Vanguard’s investment approach will remain true to label and always put our clients’ best interests first.
We’re committed to giving bond investors the best chance of investment success. We believe a long-term approach, based on genuine security selection, to deliver consistent returns can help investors and our clients meet their objectives. We began managing active bond portfolios 35 years ago – today we are one of the largest active fixed income managers in the world, with more than $1.7tn in active fixed income assets globally.
At Vanguard, we take a consistent approach built on: diversified sources of alpha, robust risk management and smart risk-taking. We put a strong emphasis on rigorous portfolio construction, driven by analysis, derived from collaborative, fundamental research. Our team of over 190 fixed income professionals, including more than 50 global credit research analysts, makes ours one of the largest fixed income teams in the market.
Rising inflation and interest rates are among the top concerns for many investors, particularly in respect of their fixed income allocations. Further down the line, as central banks taper bond-buying programmes (QE) and market volatility increases, what will this mean for fixed income markets? View our panel discussion to find out where Vanguard’s active fixed income managers see opportunities to generate consistent, risk-controlled alpha for clients.
We have long believed in providing active fixed income products that aim to deliver consistent alpha-generating opportunities. This belief steered the Vanguard fixed income group to launch its first active funds in the 1980s.
Our approach to active fixed income investing is underpinned by a set of four pillars:
We are committed to transparency so that our clients know what to expect. That means that our funds have a similar risk and asset-class profile to the assets they represent, allowing the flexibility to add value while staying true to the character of the asset class.
Diversified sources of alpha, robust risk management and intelligent risk-taking drive consistent alpha generation.
The optimum combination of these three factors maximises value for our clients, driving better long-term results.
Our scale and client-owned structure2 allows us to keep our costs low and deliver competitive net alpha without taking undue risk, meaning our investors keep more of their return.
Managed by: Vanguard Fixed Income Group
A core fixed income holding, aiming for consistent income and capital growth with an OCF of 0.35%3.
Managed by: Vanguard Fixed Income Group
Seeks exposure to emerging market bonds, providing a moderate level of income with the potential for capital growth with an OCF of 0.60%4.
Vanguard’s team culture with specialisation and clear accountability focuses on striving for better long-term outcomes for our clients.
Our high-conviction ideas and reduced dependence on macro views can provide consistent alpha generation.
Emphasis on rigorous research and deep understanding of individual issuers helps optimise security selection.
Independent and integrated risk management reduces the likelihood of large drawdowns, so our clients keep more of their returns.
Our desks around the world give us 24-hour access to global markets but also deep local knowledge.
Our scale and client-owned structure2 help deliver quality and value for our bond clients.
Environmental, social and governance (ESG) risk is one of the core elements that make up our view of a corporate bond issuer.
Nick Eisinger, emerging markets lead strategist, and Sarang Kulkarni, portfolio manager, investment-grade credit, explore how a long-term approach based on genuine security selection can deliver enduring alpha to bond investors.
1 Past performance is not a reliable indicator of future returns. Source: Lipper, a Thomson Reuters Company. Data as at 31st December 2020. 92% of our active bond funds globally outperformed their peer group over the past 5 years. 86% of our active bond funds globally outperformed their peer group over the past 10 years. Results will vary for other time periods. Only funds with a minimum five- or ten-year history, respectively, were included in the comparison.
2 The Vanguard Group Inc. (VGI) is owned by Vanguard’s US-domiciled mutual funds and ETFs. While VGI’s ownership structure can’t be replicated outside of the US, we believe that this unique mutual structure aligns Vanguard’s interests with those of our investors globally.
3 Source Vanguard. Data as at January 6, 2021. The OCF refers to the Investor GBP hedged Acc share class. The Ongoing Charges Figure (OCF) covers the fund manager’s costs of managing the fund. It does not include dealing costs or additional costs such as audit fees.
4 Source Vanguard. Data as at January 6, 2021. The OCF refers to the Investor GBP hedged Acc share class. The Ongoing Charges Figure (OCF) covers the fund manager’s costs of managing the fund. It does not include dealing costs or additional costs such as audit fees.
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.