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

Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans
Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans

Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B

Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state
Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state

“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.

Osaic in talks with Anthropic as AI reshapes advisor workforce
Osaic in talks with Anthropic as AI reshapes advisor workforce

The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO

The retirement milestone advisors aren't tracking
The retirement milestone advisors aren't tracking

For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.

Wealthtech firms target stock pay, pensions and heirs for advisors
Wealthtech firms target stock pay, pensions and heirs for advisors

Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions

SPONSORED Best Practices for Engaging Women Around Alternatives

Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.