Vanguard Launches Another Actively Managed Bond ETF

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Vanguard, the world’s second-largest asset manager, is furthering its foray into active management with the launch of its second active bond exchange-traded fund (ETF), the Vanguard Core-Plus Bond ETF (VPLS). This move reflects the increasing popularity of ETFs as a preferred investment vehicle, particularly in the realm of active management, offering investors exposure to professional fund managers who navigate a vast universe of 65,000 fixed-income securities at a relatively lower cost compared to traditional mutual funds. Vanguard’s initiative responds to the surge in demand for active bond ETFs, providing investors access to seasoned managers who can make nuanced investment decisions in the face of a challenging macroeconomic environment. The newly launched ETF is the first of two planned for 2023, with a third expected later in the month, showcasing Vanguard’s commitment to diversifying its offerings and catering to evolving investor preferences.

The Vanguard Core-Plus Bond ETF and its counterpart, the Vanguard Core Bond ETF (VCRB), set to launch mid-month, will bolster Vanguard’s suite of active bond ETFs to three. The firm’s first active bond ETF, the Vanguard Ultra Short Bond ETF, launched in April 2021 and has since amassed $4.3 billion in assets. The move into active bond ETFs aligns with Vanguard’s recognition of the appeal of ETFs due to their simplicity in management and lower fees compared to traditional mutual funds.

The two new ETFs will be managed by the same team overseeing their mutual fund counterparts. Vanguard Core-Plus Bond ETF will feature an expense ratio of 0.20%, compared with 0.30% for the investor share class of the open-end fund, while Vanguard Core Bond ETF will have an expense ratio of 0.10%, versus 0.20% for the investor share class of the mutual fund. The Admiral share classes of both funds, popular among financial advisors, will be priced the same as the ETFs.

ETF Newz Says:

The move into active bond ETFs by Vanguard signifies a natural progression for the firm, building on its established history of active management. The investment giant manages over $895.8 billion in total active fixed-income assets, including money-market funds, with about $400 billion in fixed-income ETFs.


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