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28 July, 15:47

6. The Spliced Barclays USAgg Float Adj Ix is the complete bond index against which this fund can be judged. What

is one reason the Vanguard fund might consistently lag in comparison to the index?

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  1. 28 July, 17:38
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    Sector bets

    Explanation:

    Vanguard funds are not a true representation of indexes they are supposed to track because of the occurrence of sector bets.

    Sector bet is when the fund manager for the Vanguard fund chooses to invest in parts of the fixed income universe. He feels this will yield good returns in the future.

    So what makes up the fund portfolio is different from the index itself, and this causes different investment returns.

    A way to make Vanguard funds more accurate is to tighten volume of different types of bonds that the manager can purchase. This will reduce deviation from index figures
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