VALLEY FORGE, Pa., Aug. 16, 2024 /PRNewswire/ — Vanguard today announced plans to introduce Vanguard Core Tax-Exempt Bond ETF (VCRM) and Vanguard Short Duration Tax-Exempt Bond ETF (VSDM), two active municipal ETFs that will be managed by Vanguard Fixed Income Group. Vanguard intends to launch the ETFs before the end of the year.
“Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF underscore the firm’s ongoing efforts to improve long-term investor outcomes by offering broadly diversified, low-cost municipal bond exposures with the potential to outperform the market over time,” said Dan Reyes, head of Vanguard Portfolio Review Department. “The new ETFs combine Vanguard Fixed Income Group’s proven capabilities and talent with the convenience and flexibility of the ETF structure.”
Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF will offer diversified exposure to municipal bonds across sectors, states, and credit quality with the potential to outperform their benchmarks over the long term. Vanguard Core Tax-Exempt Bond ETF will offer all-curve exposure to primarily high-quality, investment-grade municipal bonds that offer tax-exempt income. Investors in Vanguard Short Duration Tax-Exempt Bond ETF can expect a portfolio of short-duration and primarily high-quality, investment-grade municipal bonds that generate tax-exempt income with lower interest rate sensitivity.
Vanguard Core Tax-Exempt Bond ETF will have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.37% as of June 30, 2024.1 Vanguard Short Duration Tax-Exempt Bond ETF will also have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.24% as of June 30, 2024.1
The investment approach behind the new ETFs leverages the same processes, deep municipal market expertise, and management teams that have made Vanguard one of the top performing managers of actively managed municipal mutual funds. The two ETFs reflect new strategies with prospectus benchmarks and investment universes that differ from our existing mutual fund lineup. That said, investors familiar with Vanguard’s approach to managing active municipal mutual funds will find the ETFs exhibit similar characteristics, exposures, and long-term philosophy to constructing municipal portfolios.
The new ETFs provide an active counterpart to Vanguard’s existing suite of passive municipal ETFs and build upon Vanguard’s growing active fixed income ETFs alongside the recently launched Vanguard Core Bond ETF and Vanguard Core Plus Bond ETF.
A leading fixed income adviser
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 Fixed Income Group is the world’s largest manager of bond mutual funds and ETFs2, overseeing the full spectrum of fixed income asset classes and sectors. Vanguard’s municipal bond team comprises more than 40 team members who manage more than $247 billion in municipal assets as of June 30, 2024.1
Vanguard’s track record as an investment manager remains unparalleled—95% of Vanguard active fixed income funds outperformed their peer group averages over the past ten years ended June 30, 2024.3
About Vanguard
Founded in 1975, Vanguard is one of the world’s leading investment management companies. The firm offers investments, advice, and retirement services to individual investors, institutions, and financial professionals. Vanguard operates under a unique, investor-owned structure where Vanguard’s fund shareholder clients own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com.
All figures as of June 30, 2024, unless stated otherwise.
1 Morningstar data as of June 30, 2024.
2 Assets under management figures as of June 30, 2024
3For the ten-year period ended June 30, 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.
A registration statement relating to these securities has been filed with the Securities and Exchange Commission (SEC) but has not yet become effective. The SEC has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is considered a criminal offense. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Copies of the final Vanguard ETF prospectuses, when available, as well as prospectuses for all other Vanguard funds can be obtained by visiting www.vanguard.com. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Please note that a preliminary prospectus is subject to change.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
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.
Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund’s trading or through your own redemption of shares. For some investors, a portion of the fund’s income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.
Vanguard Marketing Corporation, Distributor.
SOURCE Vanguard