Asset-management giant Vanguard Group Inc. unveiled plans Thursday to launch a new exchange-traded fund in a rare move for one of the industry’s largest players.
The Vanguard Short-Term Tax-Exempt Bond ETF would track an index of municipal bonds with maturities between one month and seven years, according to a filing with the Securities and Exchange Commission. The fund would charge a fee of seven basis points.
Vanguard intends to launch the ETF, which will be managed by Vanguard Fixed Income Group, in the first quarter of 2023, the firm said in a statement Thursday.
The ETF is intended for investors seeking to generate tax-exempt yield in their portfolios while minimizing interest rate sensitivity. It will predominantly invest in short-term investment grade municipal bonds and will track the S&P 0-7 Year AMT-Free Muni Bond index. The ETF will have an estimated expense ratio of 0.07%, compared to 0.54% for the average short-term bond fund.
While Vanguard is the second-largest issuer in the $6.7 trillion ETF market, the Malvern, Pennsylvania-based company rarely introduces new products to its relatively lean lineup. It controls about $1.9 trillion of assets across 81 ETFs, while industry leader BlackRock Inc.’s $2.2 trillion haul is spread out across 392 funds, according to data compiled by Bloomberg.
The planned muni-bond fund would be the first new Vanguard ETF to launch since the debut of the $3 billion Vanguard Ultra Short Bond ETF (VUSB) in April 2021. Muni ETFs have had a banner year in 2022, with investors plowing a record $28.6 billion into the category, Bloomberg data show.
The potential new launch could come just months after Vanguard’s first-ever closure of a U.S. fund. The Vanguard U.S. Liquidity Factor ETF (VFLQ) was liquidated in late November after struggling to lure investors since debuting in 2018.
Five low-cost index ETFs to anchor Trump Accounts as advisors weigh options against 529 and UTMA plans for clients
A bipartisan proposal aimed at aligning advisor compensation rules with modern business structures is headed to the full House.
Vanilla is extending its estate planning tech to Callan Family Office's ultra-high-net-worth business, while WealthFeed's organic growth engine will now be available to roughly 100 advisors at The Mather Group.
“We are helping families take an important first step toward building a financial foundation for the next generation,” said Franklin Templeton CEO Jenny Johnson
Richard Brothers Financial Advisors joins the fee-only RIA, adding its first Maine office and $240 million in client assets
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
