Today, Vanguard released its newest bond fund, the Vanguard Multi-Sector Income Bond ETF (VGMS).
An actively managed fund, VGMS looks to offer a distinct blend of total return and competitive income. The fund has a net expense ratio of 30 basis points.
“VGMS seamlessly integrates institutional-grade active investment strategies with Vanguard’s hallmark of low-cost leadership, delivering a powerful and differentiated solution for advisors and investors navigating today’s complex and fast-evolving markets,” noted Sara Devereux, global head of Vanguard Fixed Income Group. “Our seasoned portfolio managers employ a rigorous top-down and bottom-up investment process, ensuring every security is meticulously evaluated and executed with precision and purpose.”
Blending Bond Sector Exposure
True to its name, VGMS allocates its investments to a broadly diversified mix of bond sectors. Among other sectors, this includes corporate bonds, emerging market bonds, and U.S. Treasuries.
Emerging market bonds in particular can provide a compelling way to broaden one’s bond exposure. Through emerging markets, investors can tap into paths towards yield and returns that may not be available in U.S. markets.
Normally, investing in emerging markets could foster risk, but VGMS gives investors access to Vanguard’s experienced fixed income team. Through active management, the Vanguard team could be in a better position to favorably navigate credit opportunities in emerging markets.
Additionally, the Vanguard team intends for the majority of the fund’s assets to be either denominated or hedged to the U.S. dollar. However, the fund reserves the right to invest in fixed income securities denominated in foreign currencies.
The diversification opportunities offered through VGMS are not limited merely to sector exposure. VGMS also invests in bonds across the credit spectrum, including high-yield bonds.
“Vanguard has been a leader in the fixed income index-based ETF market but has increasingly built out a lineup of actively managed ETFs,” said Todd Rosenbluth, head of research at VettaFi. “Advisors are continuing to seek out active management in a volatile market so it is great to see Vanguard bring their expertise to support advisors.”
Vanguard currently offers more than 90 ETFs listed in the United States. These funds account for well over $3 trillion in assets under management.
For more news, information, and analysis, visit the Fixed Income Channel.
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