In a challenge to iShares, Vanguard has filed a registration statement with the SEC to offer seven bond index ETFs (Investment News). Three of the ETFs will invest in U.S. Treasuries (1-3 year, 3-10 year, and longer dated), three in corporate bonds (1-5 years, 5-10 years, and long dated), and one in MBS. Each of the ETFs comes with an expense ratio of 0.15%. The company is trying to take advantage of current investment trends, one of which has investors moving into corporate bonds (Forbes).
Bonds funds in general have received $58 billion in May and June, up from $19 billion over the same two months last year. The junk-bond market itself has climbed 40% this year. While some investors are simply chasing returns, others are looking for new ways to diversify away from equities after the market sell-offs in the second half of 2008 and first quarter of 2009.