Key Highlights

  • The fund holds 575 companies and issuers, with the top ten making up 7.71% of the portfolio.
  • Australian issuers make up 50.39%, with Canada at 12.66% and the United States at 5.81%.
  • The management fee is 0.20%, and the listed annual Yield is 3.98%.
  • Bonds make up 98.63% of the fund, with cash at 1.37%.

Vanguard Australian Corp Fixed Interest index ETF (ASX:VACF) tracks the Bloomberg AusBond Credit 0+ Year Index, holding a broad selection of Australian dollar corporate bonds. The units were listed at $51.01, and the management fee is 0.20%. Vanguard selects securities based on liquidity, market access, Cash Flow needs and minimum trade sizes, aiming to track the index with a representative sample of its holdings.

Ticker

ASX:VACF

Listed price

$51.01

Management fee

0.20%

Listed annual yield

3.98%

Benchmark

Bloomberg AusBond Credit 0+Y TR AUD

Holdings

575 companies

Portfolio make-up

Bonds make up 98.63% of the fund, with cash at 1.37%. Australia accounts for 50.39%, Canada for 12.66%, the United States for 5.81%, the Netherlands for 5.38% and the United Kingdom for 4.36%. The largest holdings are Canada Pension Plan Investment Board bonds at 1.18%, 1.02%, 0.88%, 0.69% and 0.66%, followed by CDP Financial, National Australia Bank and Commonwealth Bank.

The top ten make up 7.71% of the portfolio, reflecting a broad base of 575 issuers.

Income and costs

The listed annual yield is 3.98%, and the management fee is 0.20%. Yield reflects the corporate credit spread above government rates and will move with both credit spreads and interest rates.

Risks to weigh

Corporate bonds carry Interest Rate risk, which affects prices when rates rise, and credit risk, which can cause losses when spreads widen. The large allocation to Canadian and offshore issuers adds exposure to foreign credit conditions. As an index fund, the portfolio will continue to hold issuers whose credit quality has deteriorated until the index changes.

Final Word

The Vanguard Australian Corp Fixed Interest Index ETF provides a broad Corporate Bond portfolio at a low fee, with a substantial offshore issuer weighting. Its results will follow credit spreads and interest rates, and the international mix is a feature investors should weigh.