One of the prevailing trends in the ETF industry has been the proliferation of active funds. Based on results from Trackinsight’s Global ETF Survey 2025. This has been further highlighted by the rise of active bond funds. That gives fixed income investors a pair of options to consider from Vanguard’s ETF suite.
From a global perspective, fixed income ETFs have witnessed exponential growth. Fixed income ETF assets have already exceeded $2.6 trillion. That includes more than $1.9 trillion in assets amassed in the U.S.
Regarding passive versus active strategies in fixed income, passive funds still command the lion’s share when it comes to preferred investment strategies. However, their piece of the proverbial pie is dwindling.
“One of the most notable shifts in 2024 was the rise of active bond ETFs. For the first time, active strategies represented the majority of new bond ETF launches globally—with 269 active launches vs. 250 passive,” the ETF survey report said. It mentioned assets in active bond funds have been “growing from $233 billion in 2023 to $398 billion by early 2025.”
Investors Increasingly Seeking Flexibility
“Their share of the market has expanded to 15%, up from 9% in 2019, as investors increasingly seek flexibility, credit selection, and better duration targeting,” the survey said further.
Other reasons for the shift to active? The survey results cited outperformance potential, lower fees versus active mutual funds, and risk management.
Given these reasons, investors looking to get active core bond exposure should consider the Vanguard Core Bond ETF (VCRB ). Using its active management strategy under the Vanguard Fixed Income Group, VCRB mitigates credit risk via diversified exposure to the U.S. investment-grade bond market. It also extends its exposure to other fixed income assets for diversification. That includes mortgage-backed securities and corporate securities for added yield. That said, its 30-day SEC yield is 4.69%, as of June 2.
An Active Muni Option
One area of the bond market that’s been garnering attention is municipal bonds. Offering the duality of strong fundamentals and yield, investors can derive these benefits with an active management strategy using the Vanguard Core Tax-Exempt Bond ETF (VCRM).
The fund’s holdings consist of munis from a variety of issuers. That includes U.S. states or local governments or agencies whose interest is exempt from federal income taxes and the federal alternative minimum tax. As of June 2, 90% of the fund’s holdings reside in investment-grade munis. That speaks to the quality of its holdings. Additionally, the fund’s 30-day yield is just over 4%.
The Trackinsight survey results mentioned low fees as a benefit of active ETFs. And both funds are representative of that cost-effectiveness. VCRB comes with a low expense ratio of 0.10%, while VCRM comes in at 0.12%.
For more news, information, and analysis, visit the Fixed Income Channel.
