Vanguard announced its expansion into municipal exchange-traded funds (ETFs) with the introduction of its Vanguard Core Tax-Exempt Bond ETF (VCRM) and Vanguard Short Duration Tax-Exempt Bond ETF (VSDM), two active municipal ETFs that will be managed by Vanguard Fixed Income Group.
Both are expected to launch before the end of the year.
According to the firm, Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF will offer diversified exposure to municipal bonds across sectors, states, and credit quality with the potential to outperform their benchmarks over the long term.
Vanguard Core Tax-Exempt Bond ETF will offer all-curve exposure to primarily high-quality, investment-grade municipal bonds that offer tax-exempt income. Investors in Vanguard Short Duration Tax-Exempt Bond ETF can expect a portfolio of short-duration and primarily high-quality, investment-grade municipal bonds that generate tax-exempt income with lower interest rate sensitivity.
“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, in a statement. “The new ETFs combine Vanguard Fixed Income Group’s proven capabilities and talent with the convenience and flexibility of the ETF structure.”
Vanguard Core Tax-Exempt Bond ETF will have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.37% as of June 30, 2024. Vanguard Short Duration Tax-Exempt Bond ETF will also have an estimated expense ratio of 0.12% compared with the average expense ratio for competing funds of 0.24% as of June 30, 2024.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.