Bonds and exchange-traded funds are about all that's been moving in the retail investment business lately. Malvern-based Vanguard Group's seven new Scottsdale-brand bond-index funds are designed for "wresting control of the exchange-traded bond fund market from Barclays' iShares group and going head-to-head with planned offerings from PIMCO as well as new entries that might come from the iShares acquirer BlackRock Inc.," Daniel Wiener writes in his Independent Adviser for Vanguard Investors newsletter.
Although company and industry data vary, Morningstar acknowledges Vanguard is growing faster than any other mutual fund company -- largely on the strength of its bond funds and exchange-traded funds, which offer low minimum investments and are especially attractive to the many small, hard-pressed investment advisers who have been steering clients to low-cost Vanguard ETFs this past year.
The new funds due this fall include bonds based on indices of U.S. Treasury, government agency, corporate and (Fannie Mae-type) mortgage bonds. Bond index funds typically "sample" bond classes, instead of buying some of everything in the index as with stock funds.
Wiener says Vanguard will offer a complete line-up in the major bond asset classes, though "the fund group continues to avoid the foreign bond markets, offering no funds that invest in non-dollar denominated debt. They also have not offered any tax-exempt bond index funds or ETFs." Though Vanguard may add those, too, if bonds stay stronger than stocks.