Wiener Asks: Is the 'New' Vanguard Risk-Averse?
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Wednesday, January 18, 2012

Wiener Asks: Is the 'New' Vanguard Risk-Averse?

Daniel Wiener, editor of the Independent Adviser for Vanguard Investors newsletter, has picked up on Vanguard's [profile] decision to push back the launch of two international bond index funds and ETFs.

The Valley Forge, Pennsylvania-based mutual fund giant is keeping mum on the reason.

Wiener called the decision to delay the launch a "strange" one, considering Vanguard's stated belief that "a strategic allocation to hedged international bonds in the range of 20 percent to 40 percent of the fixed income portion of a portfolio represents a reasonable starting point to improve diversification."

This is not the first time Vanguard delayed a product launch. A year ago, Vanguard postponed the rollout of three municipal bond index funds and ETFs amid the turmoil in the muni bond market. That decision, according to Wiener, was said to be partly because of the rise in fund outflows and Vanguard opted to wait for the market to stabilize.

Wiener then went on to note that the "old" Vanguard during the Bogle era did not let short-term market noise get in the way of fund launches that it deemed necessary.

"I can just see Bogle, with his nautical allusions at the fore, screaming, 'Damn the torpedoes -- Introduce 'em!" Wiener wrote.

"Is the 'new' Vanguard risk-averse? I think investors would love to get their hands on, and their money into both municipal bond index funds and foreign bond funds run in traditional, plain-vanilla, low-cost Vanguard style," he added.

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