Vanguard eyes fixed income funds launch

Vanguard is planning to launch a new range of index and active fixed income funds by the end of the year, Fund Strategy can reveal.

The fund giant has lined up a series of fixed income products as it continues to expand in the active management space.

The range will be managed by Vanguard’s existing in house fixed income team of 150 staff.

Speaking to Fund Strategy, Vanguard head of UK retail sales Neil Cowell says: “This launch is our obvious next move. It will be balanced to our current line-up. As importantly, Vanguard is a very qualified fixed income manager. There’s a lot we can add.”

Fees for the funds have not been disclosed.

Cowell says: “We’ll continue to build our active and fixed income range. There’s no doubt about that, although it is very early for us in that particular journey.”

Active expansion

In May 2016, the US asset manager, which overseas nearly £5trn in assets, launched its first series of active funds for the UK market, managed both internally and through third party fund managers including Baillie Gifford and Wellington.

As at the end of June, the Vanguard Global Equity Income, Global Equity,  Global Emerging Markets and Global balanced funds have all outperformed their benchmark sectors, according to Morningstar.

The Global Equity Income and Global Equity funds have returned 35.6 per cent and 42.8 per cent respectively versus the IA Global Equity Income and Global sectors at 29 per cent and 33.7 per cent.

For the same one-year period, the Global Emerging Markets and Global balanced funds returned 48.9 per cent and 22.9 per cent respectively. The IA Global Emerging Market and the Mixed Investment 40-85% Shares sectors returned 42.2 per cent and 20 per cent respectively.

Architas investment director Adrian Lowcock says Vanguard “pounced on the trend” of having significant US exposure and technology stocks.

He says: “This has been good in the short term if you have these calls right. US assets are a difficult one. Now, it is challenging as you don’t know where valuations are going. Being weighted to the US isn’t necessarily an active allocation.”