Home/Bonds & Fixed Income/VGB

VGB

$45.37-0.55%Bonds & Fixed Income61/100
Fund Page ↗

Vanguard Australian Government Bond Index ETF · Vanguard

Data as at 29 March 2026

TL;DR

Tracks only Australian government bonds — Commonwealth and State Government debt — with no corporate bonds. A purer interest rate play than VAF, which mixes government and corporate bonds.

MER (Annual Fee)
0.20%
#3 lowest in Bonds & Fixed Income
1Y Return
+0.8%
3Y Return (p.a.)
+1.2%
Dividend Yield
3.33%
Trailing 12 months
AUM
$1,325.1M
Assets under management
Avg Daily Turnover
$1.7M
Avg shares × unit price
Unit Price
$45.37
As at 29 March 2026
Provider
Vanguard
Loading chart…

Strategy

Holds government bonds issued by the Australian federal government and state governments. Excludes corporate bonds entirely, making it a cleaner duration and interest rate management tool.

Top Holdings

Key Fact

Government bonds are the asset class that most reliably rises during sharemarket crashes. In March 2020, when the ASX fell 37%, Australian government bonds rose in value — making VGB effective as a portfolio hedge during acute market stress.

Suited for

Investors who want pure government bond exposure without corporate credit risk. Government bonds are the safest end of fixed income and typically perform best during equity market downturns.

Risks

Same interest rate duration risk as VAF — a 1% rate rise reduces fund value by approximately 5-7%. The absence of corporate bonds means lower yield but also no credit risk beyond the Australian Government.

ETFCheck Score61/100
Fees (40%)70
Fund Size (25%)53
Liquidity (20%)47
Yield (15%)67
How scores are calculated →
Other Bonds & Fixed Income ETFs
VAF
0.20% MER
67
CRED
0.25% MER
67
QPON
0.22% MER
67
IAF
0.15% MER
66
HBRD
0.45% MER
42View all Bonds & Fixed Income ETFs →

Frequently Asked Questions - VGB

Why did VGB underperform VAF over the past year despite being lower risk?+
VGB returned 3.8% versus VAF's 4.2% over the past year because government-only bonds carry lower yields than the corporate bond component included in VAF. Corporate bonds pay a credit spread above government rates to compensate for default risk, boosting VAF's income. VGB's lower return is the price investors pay for maximum credit quality. During a genuine financial crisis, however, this dynamic reverses as government bonds rally while corporate spreads blow out, making VGB the superior defensive holding.
Is VGB an effective hedge against an Australian share market crash for SMSF portfolios?+
VGB is one of the most effective ASX-listed hedges against equity market crashes because Australian Government bonds are considered risk-free assets. During the March 2020 COVID crash, government bonds rallied as investors fled to safety, partially offsetting equity losses in diversified SMSF portfolios. However, VGB's ~5-6 year duration means it won't help if a crash is caused by rising inflation and rates simultaneously. Allocation of 15-25% to VGB is common practice for defensive SMSF portfolio construction.
What is the credit quality of VGB's holdings compared to international government bond funds?+
VGB holds exclusively Australian Commonwealth and state government bonds, all rated AAA to AA by major credit agencies, placing Australia among the highest-quality sovereign issuers globally. Unlike international government bond ETFs that may include lower-rated sovereign debt from emerging markets or peripheral European nations, VGB carries virtually zero credit default risk. This makes VGB particularly attractive for risk-averse Australian investors who want fixed income exposure without currency risk or foreign sovereign credit concerns.
How does VGB's 0.20% MER compare to buying Australian Government bonds directly?+
Buying Commonwealth Government bonds directly through the ASX or via tender avoids any ongoing MER, but requires minimum investments typically starting at $500 per bond parcel, plus brokerage. VGB's 0.20% MER provides instant diversification across dozens of government bond maturities, automatic reinvestment, and daily liquidity at any portfolio size. For most retail investors and SMSFs, VGB is more practical than building a direct bond ladder, though high-net-worth investors holding bonds to maturity may save on fees by purchasing directly.