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 Index Diversified Bond Fund invests in both Australian and international bonds. The international bond market includes over 9,000 securities compared to the Australian market, which has around 300. Including both international and Australian bonds has two major benefits for investors:
- increases diversification, which lowers risk
- provides opportunities for enhanced returns without resorting to lower grade, higher risk debt
Who it 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
Objectives
To match the total return of a customised index before taking into account fund fees and expenses.
The index comprises:
- 40% UBS Australian Composite Bond Index
- 60% Barclays Capital Global Aggregate ex Securitised Index (hedged to Australian dollars)
Benefits
| Diversification |
|
| International exposure provides opportunities to enhance returns |
|
| Income and capital growth potential |
|
| Low scaled fees |
|
| Regular savings plan |
|
Investment requirements and fees
| Minimum investment amounts | |
| Initial investment |
$5,000
|
| Additional investment by cheque |
$1,000
|
| Additional investment by BPAY® |
$100
|
| Holding balance |
$3,000
|
| Switch/withdrawal |
$1,000
|
| Buy/sell spread | |
| Purchase |
+0.15%
|
| Withdrawal |
-0.15%
|
| Management costs | |
| For the first $50,000 |
0.75% p.a.
|
| For the next $50,000 |
0.50% p.a.
|
| Balance over $100,000 |
0.35% p.a.
|
Risk/return profile
At Vanguard, we believe it's just as important to understand the risks and costs of investing, as it is to know about the rewards.
Our risk/return profiler illustrates the expected risk level and potential return for the Vanguard Diversified Bond Fund based on historical data. It's important to remember that past performance is no guarantee of future performance and return profile of each fund may vary from year to year.
