VALLEY FORGE, PA — Vanguard has announced plans to launch two new active municipal ETFs: the Vanguard Core Tax-Exempt Bond ETF (VCRM) and the Vanguard Short Duration Tax-Exempt Bond ETF (VSDM). Managed by the Vanguard Fixed Income Group, these ETFs are expected to be available by the end of the year.
“Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF 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,” said Dan Reyes, head of Vanguard Portfolio Review Department.
The Vanguard Core Tax-Exempt Bond ETF aims to provide exposure to high-quality, investment-grade municipal bonds that offer tax-exempt income. Meanwhile, the Vanguard Short Duration Tax-Exempt Bond ETF will focus on short-duration, high-quality municipal bonds with lower interest rate sensitivity.
Both ETFs will have an estimated expense ratio of 0.12%. This is notably lower than the average expense ratios for competing funds, which stand at 0.37% for similar funds to the Vanguard Core Tax-Exempt Bond ETF and 0.24% for similar funds to the Vanguard Short Duration Tax-Exempt Bond ETF as of June 30, 2024.
These new ETFs leverage Vanguard’s established processes and expertise in the municipal market. They aim to provide investors with diversified exposure across sectors, states, and credit quality, with the potential for long-term outperformance. This launch builds upon Vanguard’s existing suite of passive municipal ETFs and expands their growing active fixed income ETF offerings.
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