Recently, Vanguard Group filed to launch an institutional-only mutual fund, the Vanguard Extended Duration Treasury Index Fund, and a sister exchange traded fund (ETF). This is an attempt to compete with rivals who want a share of the highly desirable, $3.5 trillion (and growing) defined-benefit plan marketplace. Long-term bond exposure is becoming more common in these plans, Murray Coleman for MaketWatch reports. The funds would be in the 20-to-25-year duration range, and they would come out as long-term bond yields increase. The mutual fund and ETF also would have "bargain basement" expense ratios and could undercut competitors. The way to get more of the market share with institutional investors is to remove cost concerns, so it’s no surprise that the new funds are designed to be cheap.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.