Vanguard to Launch 2 Active Bond ETFs

The Vanguard Core-Plus Bond ETF and Vanguard Core Bond ETF aim to beat the broader bond market.

Reviewed by: Staff
Edited by: Ron Day

Mutual fund giant Vanguard Group on Thursday said it will launch two actively managed bond ETFs by the end of the year, adding to the already record number of active exchange-traded funds started this year.  

The two funds—the Vanguard Core-Plus Bond ETF (VPLS) and the Vanguard Core Bond ETF (VCRB)—will seek to outperform the broader bond market, the Malvern, Pennsylvania-based company said in a press release.    

Vanguard has been boosting its lineup of ETFs as the investing product steadily erodes the market share of mutual funds thanks to tax advantages and ease of trading. The company's 82 U.S. ETFs hold $2.23 trillion in assets. The company, with total assets of $7.6 trillion, has 185 mutual funds. 

The largest Vanguard ETF is the Vanguard 500 Index Fund (VOO) with $355.1 billion in assets. In the last trailing year, the best-performing Vanguard ETF was the Vanguard Information Technology ETF (VGT) at 34%. 

“Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF offer clients diversified single-fund fixed income portfolios offering exposure to a range of sectors, qualities and maturities,” Sara Devereux, global head of Vanguard Fixed Income Group, said in the statement.

The Vanguard Core-Plus Bond ETF will invest primarily in U.S. investment-grade securities, but can also put money in U.S. high-yield corporates and emerging-markets debt. It will have an expense ratio of 0.20%, compared with an average of 0.75% for competing funds, Vanguard said.

The Vanguard Core Bond ETF will offer similar exposure to the Core-Plus Bond ETF but will have more modest allocations to riskier sectors such as U.S. high-yield corporates and emerging-markets debt. It will have an expense ratio of 0.10%, compared with an average of 0.58% for competing fund 

VPLS and VCRB Active ETFs

Actively managed funds have become more popular this year with a record number of launches. As of Nov. 1, fund companies brought 309 actively managed exchange-traded funds to market in 2023, breaking the previous record of 305 set in 2021, reported.

Still, passive ETFs remain in the majority, accounting for about two-thirds of all exchange-traded funds, and Vanguard was a pioneer in index investing.