Vanguard’s First International Bond Fund May 10, 2013 Adviser Fund Update Print Vanguard’s First Ever International BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. Fund While Vanguard didn’t make any official announcement, in recent filings with the Securities and Exchange Commission, the firm revealed that it has begun operations on its new Total International Bond Index fund (it is not yet open to investors, however). The fund will be Vanguard’s first international-focused fixed-income fund available to U.S. investors and is slated for inclusion in the fund provider’s various funds of funds, which are popular in 401(k) plansA 401(k) plan is a retirement account that a company sets up on behalf of its employees. Both the participant and the employer can contribute to the account. There are two types of 401(k)s, traditional and Roth. Income invested in traditional 401(k)s isn’t taxed while it’s invested, but is taxed when it’s withdrawn. Income invested in a Roth 401(k) is taxed before it’s invested, but no tax is paid when it is withdrawn.. We’ve covered the tentative approach Vanguard has taken to the international bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. market a number of times dating back to 2011, when Total International Bond Index (for the most recent coverage offering details on the fund’s strategy, click here) and an emerging markets fixed-income fund were initially unveiled. Shortly thereafter, both funds’ introductions were delayed indefinitely at the beginning of 2012 as the euro-zone crisis began to dominate headlines. After a long wait, we’re a step closer to seeing Total International Bond Index open its doors to investors. The new fund will have Investor (ticker: VTIBX), Admiral (VTABX), Institutional (VTIFX) and ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. (BNDX) share classes. Operating expenses for the various share classes will range from 0.12% to 0.23%. As for Emerging Markets Government Bond Index, which is also slated for introduction this year, there is no indication as to when it will open. In the same filing showing that the broader international fund had begun operations, the emerging markets product had been removed. This doesn’t mean it won’t ever open, but it puts the schedule Vanguard released in February for the fund in some doubt (you can read more about Emerging Markets Government Bond Index by clicking here). Manager Moves at Fidelity and Vanguard Over the past month-plus, there have been a number of manager changes at Fidelity and Vanguard. While none should be cause for concern for investors in the affected funds, we always keep tabs on who is managing which funds at the two firms. While manager changes are less frequent at Vanguard, they do occur, and one took place at one of the sub-advisers of the Growth & Income fund. Anne Dinning, a managing director and chief investment officer at D.E. Shaw, which handles about a third of the fun’s assets, replaced Anthony Foley, her predecessor as CIO. D.E. Shaw employs a quantitative strategy, relying heavily on computer modeling to make stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. picks, so we don’t expect to see noticeable changes in the fund’s composition or management as a result of Dinning’s addition. Fidelity’s recent changes are as follows: Barry Golden succeeded Cathy Pena as manager of the Strategic Advisers Small-Mid Cap and Strategic Advisers Small-Mid Cap Multi-Manager funds on May 1. Golden has been with Fidelity since 2003, and most recently was the team leader for alternatives research within the firm’s global asset allocation group. Prior to that, he’d served as a research analyst, an associate director of investments with the Strategic Advisers Charitable Gift Fund, and team leader of the Strategic Advisers U.S. equityThe amount of money that would be returned to shareholders if a company’s assets were sold off and all its debt repaid. research team. He also previously co-managed the Strategic Advisers Growth fund. Matthew Friedman took over the lead portfolio manager role at StockA financial instrument giving the holder a proportion of the ownership and earnings of a company. Selector Large Cap Value (and the fund’s Series and Advisor clones), replacing Bruce Dirks in mid-April. Friedman joined Fidelity in 2000 as a research analyst, and starting in 2003 began managing an array of the firm’s Select sector funds, including Chemicals, Cyclical Industries, Energy, Multimedia, Natural Gas and Natural Resources. He went on to manage a number of broader funds, such as Advisor Value Strategies, VIP Contrafund, Balanced and Series All-Sector EquityThe amount of money that would be returned to shareholders if a company’s assets were sold off and all its debt repaid.. Along with his new role, he’ll continue to manage VIP Value and co-manage Value and Advisor Value. Court Dignan was named manager of Mid Cap Value, also succeeding Dirks. Dignan got his start with Fidelity as an analyst, a role he served at both Fidelity Capital Investors and as part of the equity group, covering small-cap and value stocksA stock that is statistically cheap as a multiple of its earnings or book value, as compared to the overall stock market.. He’ll continue to manage Select Insurance, which he’s been running since 2009. About Adviser Investments Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trusts, foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the fifth consecutive year, Adviser Investments was named to Barron’s list of the top 100 independent financial advisers nationwide and its list of the top advisory firms in Massachusetts in 2017. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015 and 2016. For more information, please visit www.adviserinvestments.com or call 800-492-6868. Disclaimer: This material is distributed for informational purposes only. 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