Vanguard Australian Fixed Interest Index Fund
About this fund
Bonds, or fixed interest investments as they are commonly known, play an important role in a balanced investment strategy. In addition to providing a regular income stream - an important feature for many investors - bonds can provide a stabilising effect during periods of share market volatility.
Vanguard's Australian Fixed Interest Index Fund invests in a diversified portfolio of around 330 fixed interest securities issued by Commonwealth Government, State Government, semi-government authorities and investment grade corporates.
What is this fund's investment objective?
The Vanguard Australian Fixed Interest Index Fund seeks to match the return (income and capital appreciation) of the UBS Australian Composite Bond Index before taking into account fund fees and expenses.
The index
The UBS Australian Composite Bond Index is a value weighted index of approximately 330 securities (bonds) issued by the Commonwealth Government of Australia, State Government-guaranteed treasury corporations and semi-government authorities, as well as investment-grade corporate issuers. Investment-grade issuers are defined as those rated BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's.
What is this fund's investment strategy?
Bond indexes change far more quickly than share indexes as bonds have a finite life. Every maturity and inclusion of new issues changes the composition of the index and requires Vanguard to modify the portfolio. Vanguard may make deviations from the index by holding an above-index weighting to short-term corporate bonds to benefit from the higher yield offered. This overweighting is limited to 20%. There is credit risk associated with bonds. Vanguard seeks to reduce this risk by selecting only bonds with a sufficiently high credit rating and by diversifying the fund's holdings across issuers.
Who this fund may suit
- Short to medium term investors (usually 3 to 5 years)
- Investors requiring a high quality, high yielding income stream such as retirees or those nearing retirement
- Investors seeking a low risk, diversified investment portfolio of high quality debt securities
- Investors looking to add diversification and balance to a share-oriented portfolio
- Self managed super funds
Important Information
Past performance is not an indication of future performance. Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263 / RSE Licence L0001335) is the product issuer. We have not taken your circumstances into account when preparing this publication so it may not be applicable to your circumstances. You should consider your circumstances and our Product Disclosure Statement (PDS) before making any investment decision. You can access our PDS at www.vanguard.com.au or by calling 1300 655 101. This publication was prepared in good faith and we accept no liability for any errors or omissions. We are the trustee of: Vanguard® Personal Superannuation Plan ABN 81 550 468 553/ Vanguard® LifeStrategy® Index PST - Conservative ABN 73 765 732 050/ Vanguard® LifeStrategy® Index PST - Balanced ABN 23 846 775 905 / Vanguard® LifeStrategy® Index PST - Growth ABN 95 836 361 772/ Vanguard® LifeStrategy® Index PST - High Growth ABN 61 378 605 876. © 2009 Vanguard Investments Australia Ltd. 'Vanguard', 'Vanguard Investments', 'LifeStrategy' and the ship logo are the trademarks of The Vanguard Group, Inc.
