Asset Manager Overview
Vanguard is one of the world's largest managers of passive strategies. The organization is mutually owned by investors in its U.S. domiciled funds and has a policy of returning profits to its U.S. clients through lower charges. The UK and European arms of the business return any small profits made back to the U.S. arm, which ultimately distributes profits to the investors in the U.S. domiciled funds. Overall, we do not believe that UK and European investors are significantly disadvantaged by this policy; instead, they benefit from the expertise and technology of the wider Vanguard group.
Fund Manager/Team Overview
The investment methodology of the fund is developed and maintained by the Investment Strategy Group, while implementation is carried out by the portfolio management team within the Equity Index Group. They ensure that the fund's overall exposure remains within its long-term asset allocation. The team, based in London, has been managing multi-asset strategies since 2011 and manages over £45 billion in assets.
The management of individual passive strategies at Vanguard is carried out by asset class specialists; therefore, a different team manages the equity strategies from those who manage the fixed income strategies. The Equity Index Group manages over $7 trillion in assets with more than 100 dedicated professionals. It operates globally, with three dedicated trading desks providing 24-hour trade coverage. The Fixed Income Group consists of over 200 professionals and manage over $1.5 trillion in assets.
Investment Philosophy & Process Overview
This fund provides investors with exposure to a mix of 60% global equities and 40% global bonds. To achieve this exposure, Vanguard adopts a static long-term approach to asset allocation and rebalances to ensure the fund's exposure remains aligned to it. As the fund invests globally with markets closing at different times, the fund's exposure may not be perfectly 60%/40% but the deviation should be no more than 2%. The majority of the fund will be invested in Vanguard's open-ended passive funds, with the remainder invested into Vanguard's passive ETF range. Concentration rules mean that Vanguard cannot just invest 60% of the fund in a Global equity passive fund and the remaining 40% in a Global passive bond fund. They therefore invest into between 15-20 single strategy passive funds to meet the high-level fixed asset allocation. In January 2026 the fund moved to a Non-UCITS Retail Schemes (NURS) structure, but there were no material changes to how the fund was managed.
The equity funds adopt a full replication approach. A full replication process, as the name suggests, involves purchasing all the securities in the same weights as they are represented in the index.
The fixed income team adopt a stratified sampling approach. A stratified sampling approach is commonly used when tracking a bond index with a large number of constituents due to the high transaction costs involved in purchasing every bond in the index. The fund managers start with identifying the main risks that drive the performance of the index, such as, credit risk, interest rate risk, time to maturity as well as sector, industry and geographical exposure. This is then used as a framework for selecting securities that will result in a fund with similar risk/return characteristics to the index.
The fund has a UK bias compared to global markets. In January 2026, Vanguard announced plans for a reduction in this bias that will gradually take place between March and June 2026. Within fixed income 80% will be invested in global ex-UK bonds with the remaining 20% in sterling issued bonds, this is a reduction from the 35% invested in sterling bonds previously. The overall bond exposure will be two thirds government bonds and the remaining third corporate investment grade bonds. The UK bias means that the fund will have a slightly higher duration than a typical Global bond index. All the global fixed income exposure will be hedged to GBP. The UK bias within the equity allocation will be 20%, reduced down from 25%. In general the UK exposure within global equities tends to be 2-4%. The global equity exposure in the fund is unhedged.
Vanguard do not aim to remain within any long-term volatility target. Therefore, over the medium term the absolute volatility of the fund may vary more than active funds with a specific long-term volatility target.