Vanguard expands ETF lineup with two active bond ETFs
December 14, 2023
December 14, 2023
Vanguard has launched Vanguard Core Bond ETF (VCRB) and Vanguard Core-Plus Bond ETF (VPLS). These two new actively managed bond ETFs offer clients broadly diversified fixed income exposure with low equity correlation and the potential to outperform broad bond market benchmarks over the long-term.
“VPLS and VCRB give clients broadly diversified, single-fund fixed income exposure to a range of sectors, qualities, and maturities,” said Sara Devereux, global head of Vanguard Fixed Income Group. "These new ETFs provide access to world-class active investment talent—at a low cost—along with the convenience and flexibility offered by the ETF structure.”
Actively seeking alpha opportunities across the fixed income universe
VPLS offers exposure primarily to U.S. investment-grade securities but will have flexibility to add allocations in sectors beyond the U.S. investment-grade bond market, such as U.S. high-yield corporates and emerging markets debt. It will have an estimated expense ratio of 0.20%, compared with an average of 0.75% for competing funds. Daniel Shaykevich, Brian Quigley, Arvind Narayanan, and Michael Chang will manage Vanguard Core-Plus Bond ETF.
VCRB will provide similar exposure to the Core-Plus Bond ETF but will have more modest allocations to riskier sectors such as U.S. high-yield corporates and emerging markets debt. It will have an estimated expense ratio of 0.10%, compared with an average of 0.58% for competing funds. The ETF will be managed by Daniel Shaykevich, Brian Quigley, and Arvind Narayanan.
These new ETFs share the benchmarks, management teams, and expense ratios of our existing Core and Core-Plus mutual funds. While Vanguard has offered investors core bond and core-plus bond mutual fund strategies since 2016 and 2021 respectively, the new ETFs will be distinct from the existing mutual fund products.
Vanguard Fixed Income Group
For more than 40 years, Vanguard Fixed Income Group has distinguished itself with deep investment capabilities, disciplined security selection processes, and rigorous risk management techniques, resulting in consistent, long-term performance. Vanguard’s track record reflects this, with 95% of Vanguard active fixed income bond funds outperforming their peer group averages over the past ten years ending September 30, 2023.1
Vanguard Fixed Income Group is the world’s largest manager of bond mutual funds and ETFs, overseeing the full spectrum of fixed income asset classes and sectors. The team oversees more than $2.1 trillion in global assets under management and has nearly 200 investment professionals across the globe.
All figures as of September 30, 2023, unless stated otherwise.
1 For the ten-year period ended September 30, 2023, 42 of 44 Vanguard active bond funds outperformed their peer group averages; results will vary for other time periods. Only funds with a minimum ten-year history were included in the comparisons. (Source: Lipper, a Thomson Reuters Company.) Note that this competitive performance data represents past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at www.vanguard.com/performance.
Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF are not to be confused with the similarly named Vanguard Core Bond Fund and Vanguard Core-Plus Bond Fund. These products are independent of one another. Differences in scale, certain investment processes, and underlying holdings between the ETFs and their mutual fund counterparts are expected to produce different investment returns by the products. To obtain a prospectus for Vanguard Core Bond Fund or Vanguard Core-Plus Bond Fund, please call 800-662-7447.
For more information about Vanguard funds or Vanguard ETFs, visit advisors.vanguard.com 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 possible loss of principal.
Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments. 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. Bonds of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.
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