The Fund seeks to track the return of the Bloomberg AusBond Credit 0+ Yr Index before taking into account fees, expenses and tax. 

The Bloomberg AusBond Credit 0+ Yr Index is a market value weighted index comprising securities (bonds) that are of investment grade quality and typically include bonds issued by corporate entities such as the four largest banks in Australia, offshore banks, other lending institutions, property trusts and other corporate issuers. 

Benefits of investing in the Vanguard Australian Corporate Fixed Interest Index Fund

The significant features and benefits of investing in the Fund include:

• Competitive long-term performance - Vanguard's investment approach provides investors with an efficient way to capture long-term market performance.

• Diversification - The Fund provides exposure to a diversified portfolio of securities, which means the Fund is less exposed to the performance fluctuations of individual securities. This moderates the volatility of the portfolio and smooths out' investment returns over time. The Fund provides exposure to a wide selection of available securities in the relevant index, generally holding significantly more securities than most active funds with the same benchmark. From time to time, however, the number of securities in a given index may reduce due to factors such as index rebalancing.

• Low cost investing - The Fund has low ongoing fees as we strive to minimise the costs of managing and operating the Fund. The Fund typically has low portfolio turnover resulting in low trading costs such as brokerage and other transaction costs.

The significant features and benefits of investing with Vanguard include:

• Stability and experience - The Vanguard Group, Inc. established the world's first index mutual fund for individual investors in 1976 and has been a leader in low cost index investing ever since. In Australia, Vanguard leverages the scale, experience and resources of our established global business. Investing in the Fund allows you to access the knowledge and skill of Vanguard as a specialist investment manager.

• Client focus - The Vanguard Group, Inc. was founded on a simple but revolutionary idea - that an investment company should manage the funds it offers in the sole interest of its clients. From rigorous risk management to transparent pricing to plain talk communications, we put our clients' interest first.

• Low costs - Investors can't control the markets, but they can control the costs of investing. Providing low cost investments isn't a pricing strategy for us. It's how we do business. Vanguard's scale also helps to keep costs low.

Summary risk level
Low

Relatively stable returns, with a low potential for loss of capital.

Who it may suit

Investors seeking exposure to a diversified portfolio of Australian corporate fixed interest securities.

Investment strategy and investment return objective

The Fund seeks to track the return of the Bloomberg AusBond Credit 0+ Yr Index before taking into account fees, expenses and tax. It invests in investment grade bonds issued by corporations including Australia's four largest banks, offshore banks, other lending institutions and property trusts.

The Bloomberg AusBond Credit 0+ Yr Index is a value weighted index comprising securities (bonds) that are of investment grade quality and typically include bonds issued by corporate entities such as the four largest banks in Australia, offshore banks, other lending institutions, property trusts and other corporate issuers. The benchmark has a shorter duration than the broader composite index but a lower overall credit quality (BBB- or higher by Standard & Poor's ratings agency or equivalent) and therefore a higher expected yield.

Bond indices change far more quickly than share indices because bonds have a finite life (maturity). Index eligibility criteria such as time to maturity and investment grading may cause bonds to enter or fall out of the index at month end when the index is rebalanced. Every time a security is either added to or removed from the index, its composition changes and may require Vanguard to modify the portfolio.

How we invest your money

The Fund aims to hold an appropriate number of securities so as to produce a portfolio risk exposure profile consistent with that of the index. This is generally achieved by holding a representative sample of the securities included in the index. Security weightings in the Fund may vary from the index weightings. The Fund may exclude certain securities that are included in the index or may invest in securities that have been or are expected to be included in the index. The Fund may utilise derivatives, including over-the- counter derivatives, generally to manage the overall interest rate and credit risk exposure of the portfolio.

The use of over-the-counter derivatives will not be to a material extent - that is, use will generally not exceed 5% of the net asset value of the Fund, other than temporarily and in exceptional circumstances. Importantly, derivatives will not be used to leverage the assets of the Fund.

Strategic asset allocation*

Australian fixed interest 100%

*This is a targeted strategic asset allocation. In addition, cash may be held for the purposes of liquidity management and derivatives may be used to manage market exposure.