Vanguard Group Inc. is planning its first active exchange-traded funds in two years, with both new planned products focused on the fixed-income market.
(Bloomberg) — Vanguard Group Inc. is planning its first active exchange-traded funds in two years, with both new planned products focused on the fixed-income market.
The asset-management giant aims to launch the Vanguard Core Bond ETF, which would trade under the ticker VCRB, and the Vanguard Core-Plus Bond ETF (VPLS) by the end of the year, according to a statement Friday.
The last time the firm launched an active ETF was in April 2021, when it debuted the Vanguard Ultra Short Bond ETF (VUSB). That fund now has about $4 billion in assets. Vanguard has six actively managed ETFs in its lineup, and launched just three ETFs in total in the past three years, according to data compiled by Bloomberg.
Actively managed fixed-income ETFs are “a natural growth area,” especially in the current interest-rate environment, said Todd Sohn, ETF and technical strategist at Strategas Securities.
“Investors may want a more experienced hand at the wheel to navigate a different market environment,” Sohn said in an interview. “Vanguard is also aware of the major competition brewing within the active bond space, so an ETF offering makes sense from a product lineup view.”
Should the actively managed fixed-income ETFs launch, they’d marginally expand Vanguard’s relatively lean existing lineup. The company runs 82 ETFs but commands more than $2 trillion in assets under management, which ranks it the second-largest issuer, only behind BlackRock Inc. BlackRock has more than 400 ETFs.
The Vanguard Core Bond ETF would offer exposure to US investment-grade securities “with modest allocations to riskier sectors,” including high yield and emerging markets, according to the statement. It would charge a 0.1% expense ratio. The Vanguard Core-Plus Bond ETF would be similar, though it would “have flexibility to add greater allocations in both US high-yield corporates and emerging markets.” That ETF would ask for 0.2% in fees.
–With assistance from Katie Greifeld and Sam Potter.
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