Vanguard is joining the active muni ETF fray

Vanguard is joining the active muni ETF fray
The Jack Bogle-founded fund giant is bolstering its fixed-income shelf with actively managed municipal bond strategies.
AUG 16, 2024

Vanguard is joining the growing circle of asset managers venturing into an appealing corner of the fixed-income ETF space.

On Friday, the mutual fund behemoth announced plans to expand its lineup of actively managed fixed income products by introducing two new municipal bond ETFs later this year.

The firm said it intends to launch the Vanguard Core Tax-Exempt Bond ETF and the Vanguard Short Duration Tax-Exempt Bond ETF, which will be both managed by its fixed income group.

“[The two ETFs] 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,” Dan Reyes, head of Vanguard’s portfolio review department, said in a release Friday.

Both funds will focus on primarily high-quality municipal bonds across sectors and states, with the Core Tax-Exempt Bond ETF targeting a full range of maturities and the Short Duration Tax-Exempt Bond ETF offering a portfolio focused on short-duration bonds. The latter is expected to appeal to investors seeking lower sensitivity to interest rates.

Vanguard’s approach for these ETFs builds on its established expertise in actively managed municipal mutual funds, although it said the new products will feature different benchmarks and strategies.

According to the firm, the ETFs aim to complement Vanguard’s existing suite of passive municipal bond ETFs.

With the Fed expected to start cutting rates from their current highs and the possibility of higher taxes raised by extreme levels of national debt, the municipal bond space is looking increasingly interesting for a wide swath of investors.

ETF providers haven’t been deaf to the building clamor as the likes of PGIM, Goldman Sachs, and most recently Rockefeller Capital Management have announced plans in recent months to launch strategies in the space.

Latest News

The power of cultivating personal connections
The power of cultivating personal connections

Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.

A variety of succession options
A variety of succession options

Whichever path you go down, act now while you're still in control.

'I’ll never recommend bitcoin,' advisor insists
'I’ll never recommend bitcoin,' advisor insists

Pro-bitcoin professionals, however, say the cryptocurrency has ushered in change.

LPL raises target for advisors’ bonuses for first time in a decade
LPL raises target for advisors’ bonuses for first time in a decade

“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.

What do older Americans have to say about long-term care?
What do older Americans have to say about long-term care?

Survey findings from the Nationwide Retirement Institute offers pearls of planning wisdom from 60- to 65-year-olds, as well as insights into concerns.

SPONSORED The future of prospecting: Say goodbye to cold calls and hello to smart connections

Streamline your outreach with Aidentified's AI-driven solutions

SPONSORED A bumpy start to autumn but more positives ahead

This season’s market volatility: Positioning for rate relief, income growth and the AI rebound