Vanguard changes indices underlying three bond ETFs

Aug 16th, 2017 | By | Category: Fixed Income

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Vanguard has announced a change in indices underlying three of its government bond ETFs: the Vanguard Short-Term Government Bond Index ETF (Nasdaq: VGSH), the Vanguard Intermediate-Term Government Bond Index ETF (Nasdaq: VGIT), and the Vanguard Long-Term Government Bond Index ETF (Nasdaq: VGLT).

Vanguard changes indices underlying three bond ETFs

Vanguard changes indices underlying three bond ETFs.

The changes, which are due to take place during the fourth quarter of 2017, will see the ETFs transition from Bloomberg Barclays US Government Float-Adjusted indices to Bloomberg Barclays US Treasury Float-Adjusted indices. The funds will be renamed to reflect the new indices.

By switching to pure Treasury exposures, the ETFs will provide investors with more targeted exposure to segments of the US government bond market. Vanguard also asserts that the greater liquidity in the Treasury market is expected to lower the bid-ask spreads on the funds’ ETF shares.

Greg Davis, Vanguard’s chief investment officer, commented: “Following the transition, the funds will offer investors pure exposure to discrete segments of the US Treasury market and provide them the flexibility to tailor their bond portfolios to reflect their risk and return objectives.”

Vanguard expects no changes to the funds’ total expense ratios (TERs) and minimal, if any, capital gains realizations as a result of the transition. The ETFs will still be listed on Nasdaq and their ticker codes will also remain the same.

Following the changes, the new ETF names and their underlying indices will be as follows:

Vanguard Short-Term Treasury Index ETF. TER – 0.07%
Bloomberg Barclays US Treasury Bond 1-3 Year Term Float Adjusted Index

Vanguard Intermediate-Term Treasury Index ETF. TER – 0.07%
Bloomberg Barclays US Treasury Bond 3-10 Year Term Float Adjusted Index

Vanguard Long-Term Treasury Index ETF. TER – 0.07%
Bloomberg Barclays US Long Treasury Float Adjusted Index

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