Discipline still reigns as Vanguard quickens the pace of product launches

Since our founding 50 years ago, Vanguard has made investing increasingly affordable, influencing the asset-management industry to follow suit. This industry-wide downward pressure on fund fees has become known as the “Vanguard Effect.”

In addition to our low-cost DNA, we’re also known for insisting that clients stay focused on long-term goals, even—in fact, especially—when markets become roiled. This too, has a name: “Vanguard Weather,” and it’s characterized by clients staying the course even as many investors fret, lose focus, and sell when markets fall sharply.¹

Another important aspect of Vanguard emphasizing long-term objectives is our disciplined and methodical style to launching new products, focusing on investor outcomes as opposed to our bottom line. In a marketplace that’s often characterized by pushing anything that might sell, our approach is to market products we believe are worth buying—and worth holding.

So, let’s walk through how Vanguard decides which products are worth launching.

 

Starting with what matters

Does product have enduring investment merit?

Since many firms must appeal to profit-seeking shareholders, such publicly owned asset managers need to ask themselves if a product they’re contemplating will be profitable. Moreover, other firms are often quick to create products based on trends rather than track records.

Because Vanguard is owned by its funds and the investors who own those funds,
we have no outside shareholders and aim to put our clients’ interests first.²

So, we start by asking if the investment can endure and if it reflects best thinking in categories that are worth investing in. Can we confidently defend its ability to yield a positive long-term real return? This involves being disciplined and trying to avoid speculative fads in the investment world.

We seek to find asset classes and investment strategies that offer positive real returns over the long run. This long-term return comes from economically meaningful factors, such as bond payments, earnings yield, etc.

We aim to launch products that can endure for decades. In this sense, we’re less interested in shorter-term investing trends or return streams that could dissipate quickly.

Does product fulfill long-term needs of targeted clients?

Only when we’re convinced of a fund’s long-term investment merit do we move to
the client principle. At this stage, we seek to ensure that the product not only fulfills
a long-term client need, but that we understand how clients intend to use it in their own portfolios.

We evaluate whether a product fills a client need, we understand how it can be used in portfolios, and we validate our approach by asking clients directly what they want.

That way, we can better design a fund to meet client objectives.

Can we offer a differentiated, high-quality product?

Then, we make sure that we can offer a world-class fund. And, again, because we’re owned by our clients, we seek to have our clients in mind when we design any products.

From a cost perspective, we’re keen on making sure that a proposed product is supported by strong demand that can support scale.

We also look to deliver a differentiated and high-quality product, and at low cost, even if it competes in a crowded marketplace.

In active fixed income, this differentiation comes in the form of targeting consistent alpha generation, and in active equity it means access to world class managers.

Is it feasible to launch a product?

From there, we partner with our deep bench of internal experts across legal, operations, trading, and client groups to ensure that a product solution can be effectively delivered to the market.

In short, since we are stewards of our client’s assets, we gauge our confidence in launching a fund based on whether it represents the best use of client resources.

What have we launched lately?

Despite our history of selectively launching new ETFs, we have accelerated the rate of launches lately, bringing 13 new ETFs to market since the beginning of 2024.

Let’s examine some of these ETFs and how we’ve continued to use our framework to deliver products for advisors to use for their clients.

Municipal bond strategies

Before 2023, Vanguard only offered one municipal bond ETF: Vanguard Tax-Exempt Bond ETF (VTEB). But in the past two years, that number has grown to eight ETFs, including two active ETFs.

Clients can now also choose funds based on duration and location, including state-specific strategies targeting New York and California. They give clients in those two states the extra benefit of income exempted from state income taxes.

Some examples of our design principles are Vanguard Short-Term Tax-Exempt Bond ETF (VTES) and Vanguard Intermediate-Term Tax-Exempt Bond ETF (VTEI).

To maximize their tax efficiency, the two ETFs were designed to make sure they could hold bonds to maturity to avoid selling and realizing capital gains. While this approach was less typical for maturity-segmented fixed income exposures, our understanding of end client outcomes helped us develop this approach.

 

Active fixed income

Our investment principles are rooted in active strategies too.

We frequently evaluate whether we have the right talent with the skills to consistently outperform the market. We’re confident that we meet this standard in both the Core and Core-Plus bond categories.

Despite already offering similar strategies in mutual funds, our clients have shown a clear desire to access these strategies via ETFs.

Advisors have expressed a strong preference for comprehensive active bond solutions that navigate credit, government-related issues, and other bond sub-asset classes in a single fund, all while outperforming their benchmarks. And that’s what Vanguard Core Bond ETF (VCRB) and Vanguard Core-Plus Bond ETF (VPLS) have done.

Since their inceptions, VCRB has generated 118 basis points of excess return above its benchmark, and VPLS generated 116 basis points of excess return.³

In just a year and a half, VCRB has already grown to $3.2 billion and VPLS to $620 million, both notable feats for new ETFs that are still establishing track records.⁴

 

Standardized performance for VCRB and VPLS

Fund	Expense ratio	Year-to-date	1-year	3-year	5-year	10-year	Since inception	Inception date
VCRB (NAV)	0.10%	4.25%	4.15%	—	—	—	6.22%	12/12/23
VCRB (Market Price)	0.10%	4.07%	3.96%	—	—	—	5.92%	12/12/23
Bloomberg US Aggregate Bond Index	—	3.75%	3.44%	1.74%	−1.07%	1.70%	4.71%	—
VPLS (NAV)	0.20%	4.41%	4.60%	—	—	—	6.22%	12/6/23
VPLS (Market Price)	0.20%	4.22%	4.42%	—	—	—	6.31%	12/6/23
Bloomberg US Universal Index	—	3.95%	4.00%	2.38%	−0.52%	2.04%	5.09%	—

 

Source: Vanguard as of July 31, 2025.

The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Effective July 15, 2024, the market price returns are calculated using the official closing price as reported by the ETF’s primary exchange. Prior to July 15, 2024, the market price returns were calculated using the midpoint between the bid and ask prices as of the closing time of the New York Stock Exchange (typically 4 p.m., Eastern time). The returns shown do not represent the returns you would receive if you traded shares at other times.

U.S. Treasury strategies

In February 2025, we launched two ultra-short Treasury ETFs, further building out our product offerings and highlighting how we responded to client wishes to have greater flexibility in their Treasury investments.

Before those launches, if investors wanted Treasuries with maturities below one year, there was no direct way to access them through a Vanguard ETF. Vanguard Ultra-Short Treasury ETF (VGUS) may fit this gap well for those investors who want a low-cost tool with T-bills that have maturities of one year or less.

Our research also showed another preference: Clients wanted an index-based,
U.S. government ETF option with a duration near zero to use as a liquidity position
in their portfolios.

This type of exposure in an ETF structure offers many benefits related to access, cost, trading efficiency, and tax efficiency. So, we launched Vanguard 0–3 Month Treasury Bill ETF (VBIL) alongside VGUS. VBIL grew to $1 billion in only 54 trading days and $2 billion after 101 days.⁵

Since those two launches, we added two total market government funds because some clients want the full curve without choosing their duration. They come in an index and active variety as well: Vanguard Total Treasury ETF (VTG) and Vanguard Government Securities Active ETF (VGVT), which mostly contains Treasuries, but also holds other U.S. government fixed income securities.

Vanguard currently offers one of the largest suites of Treasury ETFs today with short-, intermediate-, and long-term choices with more than $83 billion in assets under management.⁶

 

What’s to come?

With 97 ETFs, we pride ourselves on our distinct, client-focused approach to developing new funds. The result is a more focused ETF lineup that has broad appeal.

But we also keep an eye out for client needs beyond just municipal bond, active, and Treasury ETFs.

So, while we’ll continue being judicious in the way we launch funds, we’ll also continue to gauge client needs and, above all else, research the long-term performance of these strategies so advisors and their clients can invest with maximum confidence.

 

Ticker	Fund name
VTES	Short-Term Tax-Exempt Bond ETF
VTEI	Intermediate-Term Tax-Exempt Bond ETF
VTEL	Long-Term Tax-Exempt Bond ETF
VTEB	Tax-Exempt Bond ETF
VCRB	Core Bond ETF
VPLS	Core-Plus Bond ETF
VBIL	0–3 Month Treasury Bill ETF
VGUS	Ultra-Short Treasury ETF
VTG	Total Treasury ETF
VGVT	Government Securities Active ETF

 

1 Francis Kinniry, Chris Pettit, Sammy Khadder, 2025. Market volatility is inevitable—Advisor’s Alpha® is enduring. Valley Forge, Pa. The Vanguard Group.

2 Vanguard is owned by its funds, which are owned by Vanguard’s fund shareholder clients.

3 Vanguard, as of June 30, 2025. Inception dates for VCRB and VPLS are December 12, 2023, and December 6, 2023, respectively.

4 Morningstar, Inc., as of June 30, 2025.

5 Vanguard. VBIL reached $1 billion on April 29, 2025 on and reached $2 billion on July 8, 2025.

6 Morningstar, Inc., as of June 30, 2025.

 

For more information about Vanguard funds, visit advisors.vanguard.com or call 800-997-2798 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.

Past performance is no guarantee of future results.

Investments in bonds are subject to interest rate, credit, and inflation risk.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.

Investments in bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund’s trading or through your own redemption of shares. For some investors, a portion of the fund’s income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.

U.S. government backing of Treasury or agency securities applies only to the underlying securities and does not prevent share-price fluctuations. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest.

© 2025 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Funds.