Vanguard to Open First International Bond Funds for U.S. Clients

Vanguard Group Inc., the largest mutual-fund provider, will open two international bond index funds next year, its first for U.S. investors.

The firm, based in Valley Forge, Pennsylvania, asked for permission from the U.S. Securities and Exchange Commission today to start the Vanguard Total International Bond Index Fund and Vanguard Emerging Markets Government Bond Index Fund, Linda Wolohan, a company spokeswoman, said in an e-mail. The funds will likely open to investors in the first quarter of 2012, she said.

The growing popularity of index-based investing propelled Vanguard past Boston’s Fidelity Investments in total mutual-fund assets in 2010. Vanguard has attracted $33.8 billion in mutual- fund deposits, excluding money-market funds, and $27.6 billion for exchange-traded funds this year through Sept. 30, more than any other U.S. company in either category, according to data compiled by Chicago-based research firm Morningstar Inc.

Total International Bond will track the Barclays Global Aggregate ex-USD Float Adjusted Index and use a currency-hedging strategy. The second fund will follow the Barclays Emerging Markets Sovereign Index, investing only in U.S. dollar- denominated bonds. Vanguard manages about $1.55 trillion in U.S. mutual fund and ETF assets.

ETFs typically track an index and trade throughout the day on an exchange, like stocks.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.