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Fund Times

Vanguard Goes with the Float

Massive government intervention forces family to switch bond index funds to float-adjusted benchmarks.

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In a sign of how dramatically government intervention has altered the fixed-income market, Vanguard's bond index funds will switch their benchmarks this year to bogies that don't include the trillions of dollars in mortgage-backed securities the Federal Reserve is buying as part of its quantitative easing program.

Vanguard said it will start using Barclays Capital float-adjusted benchmarks for its 12 existing and proposed bond index funds and ETFs. Float-adjusted benchmarks exclude securities that do not freely trade on public exchanges, such as those held by insiders or the government.

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Dan Culloton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.