Vanguard Launches 4 Bond ETFs

April 10, 2007

SAN DIEGO (ETFguide.com) - Over the past several years Barclays Global Investors (BGI) has been the lone provider of U.S. listed bond ETFs, but now they’ve got company.

Today, the Vanguard Group launched four bond index ETFs that will track Lehman Brothers indices. They'll be managed by Vanguard’s fixed income group, which supervises $310 billion, including $65 billion in bond index fund assets.

Vanguard’s bond ETFs have expense ratios of 0.11 percent, which is half the median expense ratio of all bond ETFs according to ETFguide.com's database.  

The funds will compete head-to-head with similar bond ETFs offered by BGI.

“We are pleased to expand our ETF offerings to bonds, bringing additional choice to investors and cost competition to the ETF marketplace,” said Vanguard Chief Investment Officer Gus Sauter, who noted that Vanguard’s ETF assets more than doubled over the past year to $27 billion. “Vanguard ETFs are gaining broader appeal among investors because of their low costs, broad diversification, and precise tracking.”

Vanguard introduced the first bond index fund for individual investors more than 20 years ago with the launch of Vanguard Total Bond Market Index Fund in 1986. Today, the nearly $44 billion fund is one of the largest bond mutual funds in the U.S.

Unlike stand alone ETFs, Vanguard's funds are an additional share class of existing index mutual funds. The unique arrangement allows Vanguard's mutual fund shareholders to convert their shares to the Vanguard ETFs for a nominal fee.

Vanguard launched its first exchange-traded fund in 2001 and has gradually added to its menu of funds. Including today's offering, the Valley Forge, PA based company currently manages total of 32 ETFs.