Vanguard, the third-largest U.S. ETF provider by assets,
reported lower expense ratios effective today on three of its bond
funds, including the Vanguard Short-Term Bond ETF (NYSEArca:BSV)-a
strategy that is now a $28.5 billion fund.
BSV, as well as the Vanguard Long Term Bond ETF (NYSEArca:BLV)
and the Vanguard Intermediate Term Bond ETF (NYSEArca:BIV), are
each now 9 percent cheaper to own, with expense ratios now pegged
at 0.10 percent, down from 0.11 percent previously.
The lower ratios are a direct result of asset growth, as the
funds continue to benefit from investor appetite for fixed-income
exposure, particularly on the short end of the yield curve.
BSV attracted a net of $1.80 billion in 2012, and has gone on to
gather $2.69 billion year-to-date. The fund, which tracks the
Barclays U.S. 1-5 Year Government/Credit Float Adjusted Index,
serves up exposure to short-term investment-grade U.S. debt, and
was launched in 2007.
Intermediate-debt-focused BIV, too, has seen strong investor
demand, with net asset inflows reaching $1.54 billion in 2012, and
a net of $1.84 billion so far this year. The fund now boasts $17.1
billion in total assets.
BLV attracted a net of $279 million last year and has seen
negligible net outflows in 2013, according to data compiled by
IndexUniverse. The relatively slower demand for the $5.79 billion
fund reflects investor concern about longer-dated debt in the
context fact of likely higher interest rates.
"Costs always matter in investing, but are even more important
for bond funds in a low-return environment," Vanguard said in note
"Vanguard has benefited from strong financial markets and the
continued commitment to our funds and
by our loyal clients, which has allowed us to continue to lower
expense ratios," it added. "If the markets remain strong and
clients continue to invest at Vanguard, our funds' shareholders
could continue to see reductions in expense ratios."
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