Today, Vanguard released the Vanguard Short Duration Bond ETF (VSDB), the latest offering in the firm’s fixed income suite.
VSDB’s objective is to generate strong income while limiting a portfolio to potential price volatility. Despite being an actively managed ETF, the fund has a relatively low expense ratio of 15 basis points.
“The addition of Vanguard Short Duration Bond ETF reaffirms our commitment to meeting the evolving needs of investors who are increasingly seeking active bond solutions through an ETF wrapper,” noted Sara Devereux, Global Head of Vanguard Fixed Income Group. "VSDB combines institutional-quality active investment expertise with some of the lowest costs in the industry.”
Active Security Selection
Within VSDB’s portfolio is a broad selection of fixed income securities. This includes corporate bonds, U.S. Treasury securities, and mortgage- and asset-backed securities, among others.
Bonds of any particular quality may be purchased by the fund. Notably, this includes high yield bonds. Nonetheless, the fund does not intend to invest more than 25% of its assets into junk bonds.
VSDB’s portfolio team expects the fund’s average portfolio duration to sit between one and four years. Currently, the market environment can create a favorable environment for short-duration bond strategies. These funds can tap into consistent income while negating some of the impact from long-term inflationary headwinds.
As an additional perk, investing in VSDB can give advisors cost-efficient access to an experienced active management team. A flexible active management team can help a portfolio navigate the risks and rewards within fixed income.
“Vanguard has been building out a strong active management fixed income presence,” added Todd Rosenbluth, head of research at VettaFi. “Advisors are increasingly turning to experts to help them sort through the bond universe and not just taking an index approach.”
Vanguard currently offers a significant suite of competitive fixed income ETFs. One of the largest Vanguard ETFs, the Vanguard Total Bond Market ETF (BND ), has over $120 billion in assets under management.
For more news, information, and analysis, visit the Fixed Income Channel.
