Vanguard Australian Government Bond Index ETF (VGB)
About this Fund
|FUND MANAGER||Vanguard Investments Australia|
|ASSET CLASS||EXCHANGE TRADED FUNDS|
|INVESTMENT STYLE||The Fund invests in high-quality, income-generating securities issued by the Commonwealth Government of Australia, Australian State Government authorities, and treasury corporations.|
|INVESTMENT PROFILE||The Fund seeks to track the return of the Benchmark before taking into account fees, expenses and tax.|
|BENCHMARK||Bloomberg AusBond Govt 0+ Yr Index|
|FUND SIZE||Bloomberg AusBond Govt 0+ Yr Index|
|NO. OF HOLDINGS||100+|
Benefits of investing with Vanguard
Competitive long-term performance
Vanguard's investment approach provides investors with an efficient way to capture long-term market performance.
The Fund invests in a diversified portfolio of securities, which means the Fund is less exposed to the performance fluctuations of individual securities.
Low cost investing
The Fund has low ongoing fees as we strive to minimise the costs of managing and operating the Fund.
Investors with a medium term investment horizon, seeking a steady and reliable income stream.
About the Fund
The ETF invests in high-quality, income-generating securities issued by the Commonwealth Government of Australia, Australian State Government authorities, and treasury corporations. While being low cost, the ETF also provides some protection against capital volatility. The investments in the ETF are predominantly rated AA or higher by Standard & Poor's ratings agency or equivalent.
What is an ETF?
An ETF is an Exchange Traded Fund, which is quoted for trading on the AQUA market of the ASX (in this case, it is the CDIs that are quoted for trading on the AQUA market of the ASX). Generally, these exchange traded funds comprise broadly diversified investment portfolios of either shares, bonds or real estate securities and are constructed using an indexed investment methodology.
ETFs seek to combine the best features of index managed funds and listed shares in one investment. Vanguard ETFs come with the benefits of low cost, broad diversification, transparency and tax efficiency due to low turnover of the underlying securities. However, unlike traditional index funds which are priced only once per day, ETF securities trade on a stock exchange so they can be bought and sold at any time during the trading day at prevailing market prices. ETFs carry certain risks (refer to the section 2. Risks' in the PDS for further details).
Who is Vanguard?
Vanguard Investments Australia Ltd (Vanguard) is a wholly owned subsidiary of The Vanguard Group, Inc. With more than AUD$6.9 trillion in assets under management as of 31 December 2018, including over AUD$1.2 trillion in ETFs; The Vanguard Group Inc is one of the world's largest global investment management companies. In Australia, Vanguard has been serving financial advisers, retail clients and institutional investors for more than 20 years.
How we invest your money
The Fund seeks to track the return of the Bloomberg AusBond Government 0+ Index before taking into account fees, expenses and tax.
The Bloomberg AusBond Government 0+ Index is a market value weighted index of securities (bonds) issued by the Commonwealth Government of Australia and Australian State Government financing authorities and treasury corporations. The Bloomberg AusBond Government 0+ Index was not created by, and is not managed by, a related body corporate of Vanguard.
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.
The Fund aims to hold all of the securities in the index, where practical, or otherwise a representative sample of the securities included in the index. Vanguard selects the securities it holds based on liquidity, access to markets, portfolio cash-flow and minimum trade quantities with the aim of tracking the return of 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.
Futures traded on a licensed exchange may be used in the Fund to gain market exposure without investing directly in securities. This allows Vanguard to maintain the Funds' liquidity without being under-invested. The Fund may utilise 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 used 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.
In accordance with the index methodology, at the time of purchase the eligible fixed income securities in the Fund must be of an investment grade credit quality, which is determined by reference to ratings published by independent credit research firms.