We’re lowering our fees on seven of our bond¹ exchange-traded funds (ETFs)² to bring more value to investors.

The seven ETFs include different types of bonds and cover a wide range of regions, including the UK, the US, the euro area and emerging markets.

The Global Aggregate Bond UCITS ETF, for example, invests in around 12,000 bonds issued by governments and companies around the world. There’s also the Vanguard U.K. Gilt UCITS ETF, which invests in over 60 UK government bonds, and the Vanguard USD Corporate Bond UCITS ETF, which invests in nearly 10,000 bonds issued by companies in US dollars.

The fee reduction starts on 1 July.

Why we’re lowering our fees 

We’re lowering our fees as part of our mission to give investors the best chance of investment success. Bonds can play an important role in investors’ portfolios as they help to reduce the impact of stock market ups and downs. By reducing our fees, we’re making our bond funds more accessible to investors.

What’s a bond ETF?

Bonds are a type of loan issued by governments or companies. They often pay a fixed amount of interest and return the capital at the end of the term.

A bond ETF gives you access to multiple bonds with just one investment.

Bonds play an important role in a balanced portfolio

Bonds are typically less volatile than shares, so their value doesn’t tend to fluctuate as much. This can help to reduce the impact of stock market downturns on an investor’s portfolio. That’s why it can be a good idea to start moving more of your money into bonds, rather than shares, as you get closer to retirement, when there’s less time to recover from market dips.

Read more about how bonds work and the different types of bond funds and ETFs.

The outlook for bonds is positive

We think bonds will perform well in the coming years. This is because interest rates, on average, continue to be higher than inflation³ in most developed countries.

Right now, many central banks are lowering interest rates, but we expect them to stay higher than they were in the 2010s. Back then, interest rates were very low and bond returns barely kept up with inflation.

Now that interest rates are at more normal levels, bonds will not only help stabilise portfolios when shares are not doing well but can also provide attractive returns as investors reinvest at these higher rates.

Our new fees

How to find out if you have any of these ETFs

You can find out if you have any of the seven bond ETFs by checking your account details on our app. Or log in to your account on our website and select ‘Investments’ from the menu.

You can read more about these bond ETFs and view our full range of ETFs. 

¹ Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.

² An ETF invests in potentially hundreds, sometimes thousands, of individual securities including shares and bonds. It trades on an exchange throughout the day like a stock and will typically track a specific market, like the FTSE 100.

³ Inflation is the rate of increase in prices for goods and services.

⁴ With hedging, managers typically use derivatives (a type of financial contract) to offset exchange rate movements. The contracts typically lock in a pre-determined exchange rate at which the manager can buy or sell the foreign currency at a future date. The hedged share classes are more expensive because of the additional cost and resource needed to manage these funds.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Some funds invest in emerging markets which can be more volatile than more established markets. As a result the value of your investment may rise or fall.

ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing.

Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment.

The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds.

The Funds may use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index.

Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments.

For further information on risks please see the “Risk Factors” section of the prospectus on our website.

Important information

Vanguard only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product(s) described, please contact your financial adviser.

For further information on the fund's investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIID for this fund is available, alongside the prospectus via Vanguard’s website.

This is designed for use by, and is directed only at persons resident in the UK.

The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information is general in nature and does not constitute legal, tax, or investment advice. 

Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares and /or units of, and the receipt of distribution from any investment.

Vanguard Funds plc has been authorised by the Central Bank of Ireland as a UCITS and has been registered for public distribution in certain EEA countries and the UK. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisers on the implications of making an investment in, and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

The Manager of Vanguard Funds plc is Vanguard Group (Ireland) Limited. Vanguard Asset Management, Limited is a distributor for Vanguard Funds plc.

The Manager of the Ireland domiciled funds may determine to terminate any arrangements made for marketing the shares in one or more jurisdictions in accordance with the UCITS Directive, as may be amended from time-to-time.

The Indicative Net Asset Value (“iNAV”) for Vanguard’s ETFs is published on Bloomberg or Reuters. Refer to the Portfolio Holdings Policy.

For investors in Ireland domiciled funds, a summary of investor rights can be obtained and is available in English, German, French, Spanish, Dutch and Italian.

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

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