Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Discussion of the Bond portion of the Permanent Portfolio

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rudiger
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Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by rudiger » Thu Jan 18, 2018 11:33 am

According to the fund announcement, the following three bond funds and ETFs have been changed to pure Treasury indexes:
  • Vanguard Short-Term Government Bond Index Fund and ETF (VSBSX/VGSH)
  • Vanguard Intermediate-Term Government Bond Index Fund and ETF (VSIGX/VGIT)
  • Vanguard Long-Term Government Bond Index Fund and ETF (VLGSX/VGLT)
The benchmark changes (to remove agency bonds) were announced in August 2017 and implemented in the fourth quarter of 2017.

This means the Vanguard Long-Term Treasury Index Fund (VGLT) is a bit more suitable for the bond component of the Permanent Portfolio and related strategies.

If you're switching from long-term to intermediate-term U.S. Treasury bonds, the Vanguard Intermediate-Term Treasury Index Fund (VGIT) is also an option.

The three funds have a decent cost advantage: the expense ratio is 0.07%.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by dualstow » Thu Jan 18, 2018 4:12 pm

Although the link isn’t loading for me now, this is good to know - thank you! I remember seening an announcement regarding this, but I forgot all about it.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by rudiger » Thu Jan 18, 2018 4:28 pm

dualstow wrote:Although the link isn’t loading for me now, this is good to know - thank you! I remember seening an announcement regarding this, but I forgot all about it.
Here's a link to the press release:

Vanguard Plans Benchmark Changes For Three Bond Funds And ETFs

It was also covered in Barron's at the time:

Vanguard Switches up Benchmarks for 3 Bond Funds and ETFs
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Kriegsspiel » Thu Jan 18, 2018 5:24 pm

I'd been waiting for them to get rid of the Agency bonds so that I could start using these funds. I have been buying individuals, but I've found recently that buying individuals at Vanguard is getting harder; the minimum buys aren't low enough.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by dualstow » Fri Jan 19, 2018 8:10 am

What is the new minimum?
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by whatchamacallit » Fri Jan 19, 2018 9:06 am

dualstow wrote:What is the new minimum?

I just checked Vanguard 1 year treasuries and lowest minimum was 100 so basically $100,000. That is quite high.

However, it did let me set quantity at 1 through 99 but lowered effective yield from 1.87 to 1.84.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Kriegsspiel » Fri Jan 19, 2018 10:16 am

whatchamacallit wrote:
dualstow wrote:What is the new minimum?

I just checked Vanguard 1 year treasuries and lowest minimum was 100 so basically $100,000. That is quite high.

However, it did let me set quantity at 1 through 99 but lowered effective yield from 1.87 to 1.84.
Correct. I've been watching for a while now since one of my bills matured, and the only bills available at a reasonable minimum buy were far below the 1 year yield/were maturing in a few months.

Not worth the trouble anymore.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Jack Jones » Fri Jan 19, 2018 10:54 am

Why not buy them at auction?
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Kriegsspiel » Fri Jan 19, 2018 4:59 pm

Four-week bills on TD is another option, or could be used alongside VGSH for cash. Any longer than 4 weeks and I feel like liquidity would be an unnecessary hassle, and really even they might be pushing it. Cash should be readily accessible for rebalancing needs. Deep cash, or less accessible cash that you probably won't need for rebalancing should at least have an offsetting advantage, like higher interest rates or tax advantages.

IMO
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by dualstow » Sat Jan 20, 2018 7:32 am

Jack Jones wrote:Why not buy them at auction?
That’s the only thing I’ve ever done except once or twice. No wonder I didnt notice a minimum. Sometimes the yield was lower than the indicative yield, and a few times it was better.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Jeffreyalan » Mon Feb 12, 2018 8:54 pm

How about VGLT maturity and duration vs TLT? I know right now they look similar. But TLT descrption is 20+ year treasuries. VGLT is only 10+.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by dualstow » Mon Feb 12, 2018 10:05 pm

I see 7% in 10-20 and the rest in 20+
No?
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