In a move aimed at expanding its investment offerings, Vanguard has revealed plans to introduce two new active fixed income Exchange-Traded Funds (ETFs), Vanguard Core Bond ETF (VCRB) and Vanguard Core-Plus Bond ETF (VPLS).
The management of these ETFs will be entrusted to Vanguard Fixed Income Group, a division known for its expertise in the fixed income market. Investors can anticipate the launch of these ETFs at the close of this year.
Designed to offer clients a diversified and hassle-free investment solution, both Vanguard Core Bond ETF and Core-Plus Bond ETF will provide single-fund fixed income holdings spanning a wide spectrum of sectors, credit qualities, and maturities. The active management approach adopted for these ETFs empowers portfolio managers to proactively seek out promising opportunities while remaining vigilant about risk.
Vanguard Core Bond ETF will primarily focus on U.S. investment-grade securities, with a prudent allocation to riskier sectors such as U.S. high-yield corporates and emerging markets. On the other hand, Vanguard Core-Plus Bond ETF will share a similar construction but with the flexibility to increase allocations to both U.S. high-yield corporates and emerging markets.
Notably, Vanguard Core Bond ETF is expected to have a competitive estimated expense ratio of 0.10%, while Vanguard Core-Plus Bond ETF will come in at 0.20%.
These new offerings, Core Bond ETF and Core-Plus Bond ETF will be closely aligned with the benchmarks, management teams, and expense ratios of the admiral share classes of their respective mutual fund counterparts. However, they will remain distinct products.
Differences in total asset size, client cash flow activity, and other variables will naturally lead to variations in fund holdings and, consequently, modest disparities in fund performance, especially over shorter time frames. Investors keen on diversifying their fixed income portfolios will certainly be keeping an eye on these upcoming ETFs from Vanguard.
Vanguard portfolio review department head Dan Reyes said: “For more than forty years, Vanguard has delivered strong investment outcomes for our active fixed income investors across an expanding range of strategies.
“These new ETFs will offer investors access to Vanguard’s world-class active investment talent at a low cost and with the convenience and flexibility offered by the ETF structure.”