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Vanguard Rolls Out 2 Active Bond ETFs

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Vanguard on Thursday introduced two new actively managed bond exchange-traded funds, launching Vanguard Core-Plus Bond ETF (VPLS) and announcing that Vanguard Core Bond ETF (VCRB) will open before year-end.

The new ETFs offer broadly diversified fixed income exposure with low equity correlation and the potential to outperform broad bond benchmarks over the long term, the mutual fund giant said.

“Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF offer clients diversified single-fund fixed income portfolios offering exposure to a range of sectors, qualities, and maturities,” said Sara Devereux, global head of Vanguard Fixed Income Group. Offering the strategies through the the ETF structure meets clients’ growing preference for ETFs, she said.

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, the company said.

The Vanguard Core-Plus Bond ETF offers exposure mostly 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 expense ratio of 0.20%, compared with an average of 0.75% for competing funds, according to Vanguard. Daniel Shaykevich, Brian Quigley, Arvind Narayanan and Michael Chang will manage the ETF.

Vanguard intends to launch the Vanguard Core Bond ETF by year-end. The ETF, to be managed by Shaykevich, Quigley and Narayanan, will offer similar exposure to the Core-Plus Bond ETF but with more modest allocations to riskier sectors such as U.S. high-yield corporates and emerging market debt.

It will have an estimated expense ratio of 0.10%, compared with an average of 0.58% for competing funds, according to Vanguard.

Last week, the Vanguard Total Bond Market ETF (BND) became the first bond ETF to surpass $100 billion in assets, Bloomberg reported.

Vanguard Fixed Income Group is the world’s largest bond mutual fund and ETF manager,  overseeing more than $2.1 trillion in global assets under management, the company said.


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