Vanguard Launches Total Bond Market II Index Fund

Vanguard has introduced a new, broad market bond fund to be used exclusively by its Target Retirement and LifeStrategy families. The Vanguard Total Bond Market II Index Fund will be benchmarked against the Barclays Capital U.S. Aggregate Bond Index and is a clone of the $65 billion Vanguard Total Bond Market Index Fund.

“It is clear that our funds-of-funds offerings will become increasingly large shareholders of Vanguard Total Bond Market Index Fund,” noted Vanguard Chief Investment Officer George U. Sauter. “To mitigate the impact of future rebalancing on that fund, we believe it is necessary and prudent to introduce a second bond market index fund.” Holdings in the Vanguard Total Bond Market Index Fund that the firm’s 11 LifeStrategy and Target Retirement funds now hold will be transferred to the new fund.

Certainly, assets in the target retirement funds offered by Vanguard have more than doubled over the past three years, to $33.5 billion.