The fund invests in a range of securities issued by the Commonwealth Government of Australia. Tracking the UBS (B) Treasury Inflation Index 1+, the fund offers a low cost approach to access this asset class.

The fund seeks to preserve the risk characteristics of the asset class by investing in a range of high grade securities and has been developed to provide investors with the reliability offered by Government inflation-linked bonds.

The launch of this new fund further expands Vanguard’s broad fixed income offering to wholesale investors and advisers and provides inflation protection of the principal invested over the long term, while also offering inflation-indexed income for investors.

Geoff Diamond, Vanguard’s Head of Institutional said: “This new fund offers a solution for investors seeking stability in the real value of their holdings, regardless of inflationary pressures.”

“Vanguard’s index fixed income offerings present a very efficient way to incorporate high quality, low cost fixed income exposure into a portfolio. And this is in an asset class which active managers often struggle to outperform the benchmark after fees,” he said.

“According to Standard and Poor’s research*, in the five years to June 2011, 75 per cent of active managers failed to beat the relevant benchmark in this asset class,” Mr Diamond said.

Vanguard’s fixed income offerings span Australian and international fixed income, government bonds, diversified bonds and credit securities. Vanguard also offers cash reserve and cash plus index funds.

Vanguard has been managing fixed income portfolios for Australian investors for 15 years and is one of Australia’s largest fixed income managers, with in excess of $20 billion invested across its range of fixed income services and is also the recent winner of the Morningstar Fixed Interest Fund Manager of the Year award.

The new inflation-linked bond index fund follows Vanguard’s recent announcement of the launch of its first fixed income ETF.

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