Jean Bauler

Vanguard has launched the Vanguard Australian Floating Rate Bond Index ETF (ASX: VFLT), the firm’s first floating rate ETF globally, and managed fund, expanding its fixed income offering for Australian investors seeking regular income.

The ETF and managed fund tracks the Bloomberg AusBond Corporate Liquid FRN 1+ Year Index and provides diversified exposure to Australian dollar-denominated floating rate notes issued primarily by investment-grade corporate borrowers.

Jean Bauler, APAC Head of Fixed Income, said the growth of the category reflects a broader shift in how investors are approaching the defensive portion of their portfolios.

“Income remains a key priority for many investors, particularly those approaching or in retirement. Investors are increasingly looking for solutions that can deliver regular income with relative stability.

Advisers and individual investors are increasingly adopting floating rate exposures for their ability to provide higher income potential, while offering lower interest rate sensitivity than fixed-rate bond investments.

Floating rate products have grown strongly in Australia in recent years, supported by demand for defensive income solutions that sit between cash and other bond investments. The category has attracted significant inflows from investors seeking greater diversification while maintaining a focus on capital stability and income generation.

Unlike fixed-rate bonds, floating rate notes adjust their coupon payments in line with prevailing interest rates. The structure results in lower duration risk, reducing sensitivity to interest rate movements and helping support more stable capital values.

“Floating rate bonds can play a unique role within diversified portfolios because the income adjusts as interest rates move,” Bauler said. “When rates rise, investors can benefit from higher income payments, while the low duration profile helps reduce the price impact typically associated with fixed-rate bonds.”

VFLT has been designed as a low-cost index solution offering diversified exposure to senior floating rate notes, predominantly issued by Australian financial institutions and other corporate borrowers. The ETF distributes income monthly and complements Vanguard’s broader fixed income range by providing investors with an additional defensive allocation option. The ETF carries a market leading management fee of 0.15% per annum, with the managed fund at 0.18% p.a. 

The launch also marks an important milestone for Vanguard’s global fixed income business. VFLT is the first floating rate product developed by Vanguard globally and adds to a fixed income platform that manages approximately AUD$4.3 trillion in assets worldwide.

“As one of the world’s largest fixed income managers, we continue to see strong demand for high-quality, low-cost fixed income solutions,” Bauler said. “VFLT provides investors with a simple and efficient way to access a growing segment of the fixed income market.”

Bauler said fixed income continues to play a vital role in helping investors build resilient portfolios, particularly during periods of market uncertainty.

“For investors seeking income, diversification and stability, fixed income remains a foundational building block. VFLT provides another way for investors to access those benefits through a transparent, low-cost investment solution.”

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Duncan Burns has been appointed to succeed Daniel Reyes as the new Head of Investments, Asia Pacific, and a member of the Australian executive team, with a transition of roles expected to be complete by mid-December.

Mr. Reyes, who has served as Head of Investments and Head of Investment Strategy Group for Asia Pacific since 2017, will be relocating back to Vanguard’s headquarters in Malvern, Pennsylvania, to take up the role of Global Head of Investment Product.

Mr. Burns is currently the Head of Vanguard’s Equity Index Group for Asia-Pacific, based in Melbourne. In this role, he oversees the management of Vanguard’s Australian and global equity index portfolios and the firm’s trading operation in the Asia-Pacific region. Mr. Burns will retain oversight of the Equity Index Group in addition to assuming the Head of Investments role.

Duncan brings to the role more than 20 years of equity trading and investment management expertise, focusing on quant active investing, electronic trading, algorithmic strategies, market microstructure and transaction cost analysis.

Prior to joining Vanguard in 2013, Mr. Burns worked for seven years at Jacobs Levy Equity Management, a US provider of quantitative equity strategies for institutional clients. He started his career on Wall Street in 1996, working at Donaldson, Lufkin & Jenrette (DLJ) where he spent several years managing the agency trading desk of DLJ’s retail brokerage arm.

He holds a Bachelor of Arts in Economics from Lafayette College and an MBA from the Yale School of Management. He is a CFA Charterholder and is a member of the New York Society of Securities Analysts.

Alexis Gray has been appointed as Head of the Investment Strategy Group (ISG) Asia Pacific. Alexis is currently a senior economist within ISG, Vanguard’s global research team that serves clients through developing and delivering research that serves as the basis for Vanguard’s investment principles and methodology, guides Vanguard’s global leadership and influences decisions about its investment offerings and portfolio construction.

Prior to her current role, Alexis served as a senior economist for Europe at Vanguard in London. She earned a bachelor’s degree in economics and finance with first class honours from the University of Melbourne, and a Master of Statistics from the London School of Economics.

Ms. Gray regularly serves as an ambassador for Vanguard, speaking at client events and industry conferences on a range of topics, and has authored numerous research papers on macroeconomics and investment issues.

In other changes, Head of Fixed Income for Asia Pacific, Geoff Parrish, will return to the Vanguard Group in the US to take up a new role as Global Head of Bond Indexing in October 2021.

Mr. Parrish will be replaced by Jean Bauler, CFA who joined Vanguard recently following 11 years with HSBC, most recently as Director, Markets Treasury in HSBC Australia. Mr. Bauler brings significant fixed income experience to Vanguard’s existing Asia-Pacific fixed income index group, who manage Vanguard’s portfolio of fixed income index funds and ETFs in the Asia-Pacific region.

Aidan Geysen, Senior Investment Strategist in ISG, will move into a new role as Investment Governance Senior Specialist in the Office of the Superannuation Trustee for Vanguard Super.

Mr. Geysen has played a leading role since 2016 within the ISG team in developing and delivering research insights into portfolio construction, exchange traded funds, and investment markets, and has served as an ambassador and media commentator for Vanguard. Recruitment is underway to replace this role with the group.

These changes form part of Vanguard’s long standing and successful program of rotating senior leadership roles across markets and portfolios, and growing the depth and breadth of experience and expertise within Vanguard’s senior leadership teams.

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