On March 10th, Vanguard introduced a new low-cost entrant to the core bond fund category, according to a staff report from the Daily Local News.

The new Core Bond Fund offers investors two low-cost share classes, Investor Shares and Admiral Shares. Both these classes of shares feature expense ratios that are well under the core bond fund category with an average of 0.80 percent.

“Vanguard Core Bond Fund invests primarily in high-quality investment-grade market, including Treasury, mortgage-backed, corporate and asset-backed securities of varying yields and maturities,” said Gregory Davis, Head of Vanguard Fixed Income Group. “The fund will limit its exposure to non-investment grade bonds to five percent.”

Davis also noted that Vanguard considers this fund well-suited for those investors who are seeking “an actively-managed, high-quality, and broadly diversified holding in their fixed income portfolio.”

While similar to Vanguard Total Bond Market Index Fund, in that it provides low-cost exposure to investment-grade intermediate-term average maturity issues, the new Core Bond Fund differs by being actively managed. By doing this, it can use a risk-controlled approach to try and outdo the performance of broad-investment-grade issues in the U.S.

The Core Bond Fund comes a little over a year after Vanguard introduced its other low-cost actively managed fixed income fund, the Vanguard Ultra-Short-Term Bond Fund. This has expense ratios of 0.12 percent for Admiral Shares and 0.20 percent for Investor Shares reflected in the fund prospectus  launched in February last year.

Vanguard will be offering the Core Bond Fund Admiral Shares at $20 per fund share and Investor Shares at $10 per fund share during the subscription period, which runs through to March 24th.

Read more about Vanguard’s new fund on the Daily Local News here, and check out previous VISTA Today coverage of Vanguard here.