Vanguard Emerging Markets Bond Fund

Investment rationale

The fund is designed to provide total return while generating a moderate level of income through exposure to emerging market bonds. It is a UCITS emerging markets fixed income strategy with a Summary Risk Indicator of 3 out of 7 and a recommended holding period of 3 years. It is intended for a wide range of investors seeking access to a portfolio managed in line with a specific investment objective and policy. Its distinct role comes from its focus on emerging market sovereign and related debt, with mostly U.S. dollar-denominated or U.S. dollar-hedged exposure and the ability to add local-currency bonds on an unhedged basis.

2026-07-31

How the strategy works

The fund seeks to provide total return while generating a moderate level of income by investing primarily in bonds of issuers in emerging market countries. Under normal circumstances, at least 80% of assets are invested in fixed income securities of issuers tied economically to emerging market countries, including sovereign debt, debt of government agencies and supranationals, and debt securities issued or guaranteed by foreign corporations and financial institutions. It uses an active management strategy with the J.P. Morgan EMBI Global Diversified Index as the named index; the fund invests in index components but the investment manager follows distinct approaches and may restrict deviations from the index on security selection and fixed income sector bases. The fund seeks to have a majority of assets denominated in or hedged back to the U.S. dollar, may invest in local-currency bonds on an unhedged basis, may use derivatives to reduce risk or cost and/or generate extra income or growth and for investment purposes, and reinvests income in the accumulation share class. The recommended holding period is 3 years, shares deal daily with a 12:00 Irish time cut-off, and settlement is T+2.

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Investment philosophy

• The fund invests across emerging market fixed income securities of various maturities, yields and qualities, with at least 80% of assets normally in issuers economically tied to emerging market countries.

• It follows an active management approach relative to the J.P. Morgan EMBI Global Diversified Index, taking active fixed income sector views with a focus on bond-specific selection while still investing in index components.

• The manager may restrict how far holdings deviate from index constituents on security selection and sector bases, and may apply constraints that limit the potential volatility of the fund relative to the index; these constraints may change or be removed depending on market conditions.

• Currency positioning is centered on having a majority of assets denominated in or hedged back to U.S. dollars, with discretion to hold local-currency emerging market bonds on an unhedged basis.

• At 31 July 2026, the portfolio held 272 bonds, was concentrated mainly in government-related sovereign issuers, and had largest country weights in Mexico, Turkey, Indonesia, Argentina and the Dominican Republic, with most bonds maturing in the 5-10 year and 1-5 year ranges.

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Management team

The fund is managed by Vanguard Global Advisers, LLC through the Global Fixed Income Team.

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Distinctive features

The fund combines active emerging market bond selection with a benchmark-aware framework tied to the J.P. Morgan EMBI Global Diversified Index. At 31 July 2026, its portfolio was primarily sovereign and government-related, with 72.8% in government-related sovereign issuers and 12.4% in government-related agencies, which clearly defines the opportunity set. The structure is institutional, with daily dealing, T+2 settlement, an Ireland-domiciled UCITS format, and an ongoing charges figure of 0.45% for the Institutional Plus USD accumulation class. The strategy also offers flexibility through mostly U.S. dollar-based exposure, optional unhedged local-currency bonds, and derivative use for investment and risk or cost management purposes.

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Risks

The fund is classified as 3 out of 7 on the Summary Risk Indicator, described as a medium-low risk class, and poor market conditions are unlikely to impact the fund's capacity to pay investors. The value of its bonds and fixed income-related securities can be affected by interest rates, inflation, credit spreads and volatility, and these in turn are influenced by political events, economic news, company earnings and significant corporate events. The fund is exposed to emerging markets risk, liquidity risk, credit risk, counterparty risk, inflation risk, call risk and currency risk, and emerging markets are generally more sensitive to economic and political conditions than developed markets. Risk is also driven by concentration in specific sectors, countries, currencies or companies, and by the use of derivatives, which can increase or reduce exposure to underlying assets and lead to greater fluctuations in net asset value.

2026-07-31

Asset manager

The fund is a sub-fund of Vanguard Investment Series plc, with Vanguard Group (Ireland) Limited as the management company. The investment manager is Vanguard Global Advisers, LLC. The fund is a UCITS domiciled in Ireland. The issuing entity is Vanguard Investments Switzerland GmbH.

2026-07-31