Vanguard Asset Management, a UK-based subsidiary of the Vanguard Group, has unveiled a global short-term bond index fund for investors that are looking to manage volatility in their portfolios.

Vanguard Asset Management, a UK-based subsidiary of the Vanguard Group, has unveiled a global short-term bond index fund for investors that are looking to manage volatility in their portfolios.

The Vanguard Global Short-Term Bond Index fund will be managed on a hedged basis to help reduce the volatility created by currency movements and preserve the risk-return profile offered by the underlying asset class, Vanguard said in a statement.

Vanguard said that the new fund has a total expense ratio of 0.2 per cent and is aimed at investors seeking a diversified low-cost index fund to help manage interest rate, currency and credit risk in their portfolios.

The fund will track the Barclays Global Aggregate 1-5 Years ex-US MBS Float Adjusted Bond Index and will invest broadly across a global universe of securities including government, investment grade corporate, government related and securitised ex-US mortgage-backed securities.

“Not only do global short-term bonds provide stability and diversification, they also play a valuable role in protecting the downside risk of portfolios. The Vanguard Global Short-Term Bond Index fund aims to serve that purpose by offering broad diversification, lower expected volatility compared to longer maturity global bond funds, and low-cost access," said head of product Axel Lomholt.