Vanguard’s new index core-plus bond ETF empowers clients to invest "Beyond the Agg"

With the launch of Vanguard Core-Plus Bond Index ETF (BNDP), investors now have a low-cost index option to gain exposure to the popular core-plus category. The core-plus strategy expands access to more parts of the fixed income universe, notably high-yield and emerging markets.

BNDP is designed for investors seeking a single product solution to track the investment results of the full curve and quality spectrum of the U.S. bond market, extending exposure beyond the more popular Bloomberg U.S. Aggregate Bond Index—colloquially referred to as the Agg.

This new ETF, designed to track the Bloomberg U.S. Universal Float Adjusted Index, comes with an expected annual expense ratio of 5 basis points (bps), the lowest in the category and well below the core-plus segment’s 38 bps average.¹

Interest in investing beyond the Agg has been decades in the making, prompted by an evolving bond market that has seen a shift in corporate debt structures and accelerating expansion of U.S. government indebtedness over the past 20 years.

The changing composition of the Bloomberg U.S. Universal Index from 2014–2024

Source: Bloomberg, from December 31, 2013, through December 31, 2024.

Growing appetite for broader bond-market strategies

These dynamics have led many advisors to widen their search for a category of bond funds that offer access to broader bond-market opportunities.

The core-plus ETF category has thus attracted more interest as it adds exposure to high-yield and dollar-denominated emerging markets to further diversify bond holdings.

This added diversification has historically resulted in a higher return per unit of risk for the Bloomberg U.S. Universal Index relative to the Agg, as the chart below indicates.²

Returns of the Agg and Universal indexes over the last 20 years

Source: Morningstar, from September 30, 2005, through September 30, 2025.

Source: Morningstar Inc., as of September 30, 2025.

Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. 

A single-fund solution

The presence of the high-yield and emerging markets sub-asset classes in BNDP’s index simplifies the approach to building a market-weighted core fixed income allocation.

About 85% of the Universal benchmark holdings overlap with the Bloomberg Aggregate Index, with most of the remaining 15% in exposure making up high-yield and emerging markets bonds, unlocking an additional $7 trillion in market value.³

BND … plus

BNDP is designed for two broad groups of clients:

• Those who desire a competitively priced single-fund solution to the whole bond market, extending exposure beyond the Agg. These advisors may be setting up their investors with a relatively simple core fixed income allocation to serve as a ballast to their equity portfolio.
• Those who have sought core-plus bond exposure in an active vehicle but are disappointed in their manager’s performance and/or are seeking more predictable returns through an indexing strategy. For these clients, an index alternative may be preferred.

Don’t pay for underperformance

Further regarding the latter group that may be disappointed with returns of active strategies, Vanguard research indicates that around half of active core-plus funds have difficulty consistently outperforming the Universal and, net of fees, 50% underperform.⁴

Moreover, Vanguard research suggests that about a fifth of advisors surveyed indicated they would favor an index option for the core-plus sleeve of portfolios they manage.⁵

An indexing approach applied to the core-plus category looms large for investors whose active holdings may have a track record of underperformance and more of a penchant for index approaches. If a high-quality active ETF is still their ideal, then they may also wish to explore Vanguard Core-Plus Bond ETF (VPLS).

But with Vanguard’s indexing expertise, BNDP is a credible choice for investors seeking strong returns from the broad bond market.

1 Morningstar, as of September 30, 2025. The expense ratio information shown reflects estimated amounts for the current fiscal year.

2 While the chart does not reflect returns of a float-adjusted version of the Universal Index, the ETF BNDP tracks the Bloomberg U.S. Universal Float Adjusted Index.

3 Bloomberg, as of June 30, 2025.

4 Vanguard Investment Advisory Research Center using data from Morningstar, Inc., as of December 31, 2024. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. 

5 Vanguard research, based on survey of 640 advisors conducted by Cogent Syndicated, a division of Escalent, between March 8, 2025, and March 24, 2025.   

For more information about Vanguard funds or ETF Shares, contact your financial advisor to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information 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 the possible loss of the money you invest.

Diversification does not ensure a profit or protect against a loss.

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. These risks are especially high in emerging markets.

Emerging markets risk, which is the chance that the bonds of governments, government agencies, and government-owned corporations located in emerging markets will be substantially more volatile, and substantially less liquid, than the bonds of governments, government agencies, and government-owned corporations located in more developed foreign markets because, among other factors, emerging markets can have greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems; and greater political, social, and economic instability than developed markets.

High-yield bonds generally have medium- and lower-range credit-quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit-quality ratings.

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.

"Bloomberg®" and Bloomberg U.S. Universal Index are service marks of BloombergFinance L.P. and its affiliates, including Bloomberg Index Services Limited ("BISL"), the administrator of the index (collectively, "Bloomberg") and have been licensed for use for certain purposes by Vanguard. Bloomberg is not affiliated with Vanguard, and Bloomberg does not approve, endorse, review, or recommend BNDP. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to BNDP.