Vanguard Introduces New Active ETFs for First Time in 2 Years

The funds tap into demand for active fixed-income ETFs from Vanguard.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Mark Nacinovich

Vanguard, the ETF issuer behemoth with about $2 trillion in 82 funds, is launching two new active fixed-income products for the first time since 2021.  

The exchange-traded funds, which the company first outlined in a statement on Sept. 22, include the Vanguard Core Bond ETF (VCRB) and the Vanguard Core-Plus Bond ETF (VPLS). 

The funds offer investors exposure to a diverse range of credit qualities and maturities, according to the company. The Vanguard Core Bond ETF will invest primarily in U.S. investment-grade securities, while the Core-Plus Bond ETF will be able to give more exposure to U.S. high-yield corporate fixed-income and emerging markets.  

“These new ETFs will offer investors access to Vanguard’s world-class active investment talent at a low cost and with the convenience and flexibility offered by the ETF structure,” Dan Reyes, head of Vanguard Portfolio Review Department, said in the statement.  

The Vanguard Core Bond ETF will have an expense ratio of 0.10%, while the Vanguard Core-Plus Bond ETF will charge 0.20%. The average expense ratio for fixed-income ETFs is 0.34%, according to etf.com data.  

Active ETFs Gain Traction 

As investors look for products that are different than broad indexes, active management has become an increasingly popular choice.  

“This is a natural progression of what Vanguard has been doing with their fixed income business in recent years,” said Mike Mulach, a research analyst at Morningstar who covers fixed income.  

Mulach noted that the investment vehicles will be particularly compelling to advisors who are putting together model portfolios. With ETFs, investors can get broad fixed-income exposure without paying the fees of mutual funds.  

The two new funds give investors similar exposure to two of Vanguard’s popular mutual funds, the Vanguard Core Bond Fund Investor Shares (VCORX), which has an expense ratio of 0.2%, and the Core-Plus Bond Fund Investor Shares (VCPIX), which has an expense ratio of 0.3%.  

As yields have risen, fixed income has become increasingly attractive to investors. “A few years ago, you had people reaching for yield in riskier corners in the market, but today, you can build a portfolio of very high-quality investments be able to meet your goals in terms of what you're trying to do with these fixed income strategies,” Mulach said.  

The last active fund Vanguard launched was its Vanguard Ultra Short Bond ETF (VUSB), which has garnered about $4 billion under management since its launch in April 2021.  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.