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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.

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