Vanguard issued a press release introducing its new Vanguard Ultra Short Term Bond Fund. The release says, "Vanguard today introduced Vanguard Ultra-Short-Term Bond Fund with two low-cost share classes -- Investor Shares and Admiral Shares. The fund's Investor Shares have an estimated expense ratio of 0.20% and require an initial minimum investment of $3,000. Admiral Shares have an estimated expense ratio of 0.12% and require a minimum investment of $50,000. The new actively managed fund is now accepting investments during a subscription period that ends February 23, 2015. While the subscription period is in effect, the fund will invest in money market instruments as it accumulates adequate assets to construct a representative, diversified portfolio. Following the subscription period, the fund will invest in high-quality bonds -- including money market, government, and investment-grade corporate securities -- and will have an expected duration of approximately one year. "Vanguard Ultra-Short-Term Bond Fund is a low-cost, broadly diversified fund designed for investors who, in this low-interest rate environment, seek more income than a money market fund, but recognize the risks and are willing to accept the modest price volatility that will accompany the fund," said Vanguard Chief Investment Officer Tim Buckley." Upon filing the registration statement with the U.S. Securities and Exchange Commission, Vanguard warned investors not to consider the fund a money market fund substitute.... The fund broadens Vanguard's taxable bond fund offerings, which now includes 11 active funds and 12 index funds." It continues, "Gregory S. Nassour, CFA and David Van Ommeren, both principals and senior portfolio managers, will co-manage the fund.... In 2014, nearly $75 billion flowed into Vanguard's U.S.-based fixed income products." Dan Wiener from the Independent Adviser for Vanguard Investors also announced the news, "Here Comes Ultra-Short-Term Bond <i:http://adviseronline.investorplace.com/>`_." He writes, "This money-market alternative for investors who can withstand a bit of volatility in their share price, should be well-received by those who have substantial sums tied up in money funds paying 0.01%. Vanguard's gone back-and-forth on whether the fund is, or isn't a money-fund alternative but as they've written, it should appeal to investors who'd like to "earn a better return than the near-zero yield of a money market fund without losing the ability to access your money." No word on yield, obviously, but ... Expenses are standard Vanguard -- i.e.: Low." Note: This fund won't be in our pending Bond Fund Intelligence, which should be sent out early next week, but we'll add it in the March issue of BFI.

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