Traditionally, Vanguard hasn’t issued new exchange traded funds as frequently as rivals have. In a testament to the asset-gathering proclivity of its roster, Vanguard is the second-largest ETF issuer and it got with there with just 94 funds – far fewer than several of the firms dwelling around the upper tier.
That said, Vanguard will add to its ETF lineup when it appropriate and it did that last week, expanding its roster to 97 ETFs with the debuts of three fixed income funds. With that trio, the Pennsylvania-based asset manager offers 36 bond ETFs spanning a variety of durations, geographies and corners of the bond market. A positive for clients and investors looking to avoid credit risk is that all of Vanguard’s fixed income ETFs are investment-grade.
Getting to the new additions, they are as follows: the Vanguard Government Securities Active ETF (VGVT), Vanguard Total Treasury ETF (VTG) and the Vanguard Total Inflation-Protected Securities ETF (VTP). VGVT is actively managed, the eighth such addition to the Vanguard ETF portfolio, while its two stablemates are index-based funds.
More Details on Vanguard’s New Bond ETFs
VGVT comes to market at a time of soaring popularity for actively managed fixed income ETFs. It’s an intermediate-term fund focusing on asset-backed securities and Treasuries, which can serve as a core bond holding in client porfolios.
"The actively managed VGVT leverages our fixed income expertise to deliver a flexible, high-quality portfolio of U. S. government and agency bonds, along with select securitized credit," said Roger Hallam, Global Head of Rates, Vanguard Fixed Income Group, in a statement. "VGVT is built to serve as a resilient core bond holding—one that adapts to changing market conditions while preserving the diversification and risk-buffering qualities investors expect from Treasuries. It's a compelling option for those seeking to balance equity exposure and pursue long-term portfolio stability through active management. "
VTG follows the Bloomberg U. S. Treasury Total Return Unhedged USD Index and is another intermediate-term product. Focusing on Treaury-inflation protected securities (TIPS), the aforementioned VTP tracks the ICE U. S. Treasury Inflation Linked Bond Index. Both rookie ETFs feature the Vanguard hallmark of deep benches, meaning individual security risk is scant.
Speaking of Vanguard Hallmarks…
As advisors and scores of retail investors know, Vanguard is a low-cost leader. VGVT, VTG and VTP live up to that pedigree. For its part, VGVT charges 0. 10% per year, or $10 on a $10,000 investment – cheap compared to the broader universe of actively managed fixed income ETFs.
VTG and VTP are downright inexpensive, too, featuring annual expense ratios of 0. 03% and 0. 05%, respectively. Those are likely to be among the most favorable fees in those ETFs’ respective fixed income categories.
Bottom line: Advisors and investors now have more bond ETFs from which to choose courtesy of one of their favorite issuers and the cost of admission is expectedly low.