The Vanguard Group is changing the names of four corporate bond funds to give them increased flexibility to invest outside of the corporate universe, according to Bob Auwaerter, head of fixed income in Malvern, Pa. The portfolios will undergo the name and policy changes later this month although he said the modifications will not result in immediate shifts in strategy for the funds. That being said, he noted the changes will give them the ability to allocate a larger share of capital outside of the corporate bond universe, in instruments such as Treasuries and mortgage-backeds.
For allocation purposes, the funds consider asset-backeds as within the corporate realm; ABS currently accounts for about 19% of the funds, he said.
Specifically, the names of the Short-Term, Intermediate-Term and Long-Term Corporate funds and a variable insurance fund will replace 'corporate' with 'investment grade.' Auwarter said while the change is made to increase flexibility for Vanguard in what it can include in the funds, "there's no hidden agenda" as part of the changes and it will still include a majority in high-grade corporates.