Susan Dziubinski: We talked a little bit, of course, about that shift toward the ETF part of the business rather than the mutual fund part of the business. Did Vanguard launch, would you say, any notable ETFs in 2024 that maybe investors should have on their radar?
Daniel Sotiroff: Yes. This has been an area where they’ve been very busy. We’ve seen a lot more launches coming out of Vanguard in the last, say, year and a half than we probably have seen in a long time. A lot of them fit with the expectations that we have for them. So it’s a lot of fixed income, it’s a lot of ETFs, which is proving to be pretty good.
5 New Vanguard ETFs to Put on Your Radar
- Vanguard Core Tax-Exempt Bond ETF VCRM
- Vanguard Short Duration Tax-Exempt Bond ETF VSDM
- Vanguard Short-Term Treasury ETF VGSH
- Vanguard 0-3 Month Treasury Bill ETF VBIL
- Vanguard Short Duration Bond ETF VSDB
You brought up active muni-bond ETFs launched in November. So, Vanguard Core Tax-Exempt Bond ETF, that’s a broad US muni-bond ETF, right? Across durations across credit—well, investment-grade, I should say. And then Vanguard Short Duration Tax-Exempt Bond ETF. That’s more focused at the short end of the curve, a little bit less interest-rate risk with that sort of vehicle. Very cheap, 12 basis points.
We’re still in the very early innings of this, so it’s hard to say how popular they’re going to be, how they’re going to resonate, but they have a seasoned manager from their management ranks. Stephen McFee is going to be responsible for them. So all of that type of stuff seems to be in order. I think we’re just kind of waiting to see how these things shake out, how popular they prove to be, and make a decision ultimately: Do we want to bring these under coverage or not and assign a rating to them? So, those new muni-bond options there.
The rest of it has been short-duration type stuff, really, at the very, very short end of the curve. So Vanguard Short Treasury ETF and Vanguard 0-3 Month Treasury Bill ETF, basically two T-bill options. The very safest of the safest type stuff in the bond world. This is the spicy hot sauce at Vanguard. They’re index-tracking, very boring. Seven basis points; they’re very cheap. No expected launch date yet. They said sometime in Q1, so something to watch out for if you’re interested in T-bills, people, right? And then the other one is a little bit more nuanced. It is an actively managed option. Vanguard Short Duration Bond ETF, an actively managed multisector short-term bond ETF, can hold up to about 25% high yield. We’ll see what that actually looks like in practice because sometimes that’s just a provision written in the prospectus. Expected expense ratio of around 15 basis points a year. So again, very cheap. I expect that’s probably going to follow a similar management process to what we’ve seen from the other core bond ETFs and stuff like that. Very much a team approach sort of thing. There’s lots to keep an eye on there with the new launches, and I suspect we’re probably going to see more in the future.