BELGIUM - Vanguard Investments Europe has launched a new inflation-linked bond index fund on the back of increased demand from pension funds on the Continent for passive investment solutions.
“About 50% of inflation-linked bonds held by British pension funds are managed passively, as the United Kingdom is one of the oldest markets in Europe for this type of instrument,” said Ken Volpert, Vanguard’s head of the bond indexing team, which managed more than e42bn in bond index assets.
“We see an increased demand from Continental European investors for similar investment solultions.”
The Vanguard Euro Inflation-linked Bond Index Fund aims to protect long-term investors from Euro-zone inflation as well as diversification benefits from the low correlation of linker bonds with other asset classes.
Invested in Eurodenominated inflation-linked government bonds, the fund is managed on a passive basis against the Lehman Global Inflation-Linked Eurozone - Euro CPI.
“With this fund, Euro-based European investors will now have access to the benefits of indexing, mainly low costs and diversification, and the flexibility to hedge their investments from Euro-inflation risks,” Volpert added.
The new fund is part of Vanguard Investment Series, the firm’s Dublin-based umbrella fund that is UCITS III compliant.
In addition, Vanguard has launched a third actively managed US equity fund - Vanguard US Fundamental Value Fund - managed by Pzena Investment Management, a New-York based firm specialising in value investing.
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