Vanguard’s Recent Active ETF Expansion Worthy of Celebration

Among the larger ETF providers, few have product stability like Vanguard. When changes do occur, that’s worthy of celebration. Last week, some of Vanguard’s fixed income leadership was in New York to help close the stock market at the Nasdaq. VettaFi was honored to join them.

The Vanguard Core Bond ETF (VCRB) and the Vanguard Core-Plus Bond ETF (VPLS) began trading in December. These are both actively managed ETFs run by experienced members of the Vanguard Fixed Income Group that run mutual funds with similar names. Overall, Vanguard’s active fixed income bond mutual funds outperformed their peer group averages over the past 10 years ending September.

Vanguard at Nasdaq

Appeal of Active Fixed Income ETFs

While advisors and end clients have long used active management in fixed income through mutual funds, VettaFi is seeing growing demand industrywide for active fixed income ETFs. The Vanguard Ultra-Short Bond ETF (VUSB) has $4.4 billion in assets despite launching less than three years ago. VUSB has an average duration of one year and has a 5.1% 30-day SEC yield.

Yet with the Federal Reserve likely to begin cutting rates in 2024, many advisors are looking to take on more interest rate risk in exchange for potentially higher reward. They are also comfortable with approaches that have the flexibility to adjust based on the market environment. This is where VCRB and VPLS can possibly fit in and compete with other asset managers’ active core ETFs.

Rosenbluth and Vanguard