Vanguard plans to introduce a new actively managed fixed-income exchange-traded fund in June, according to a preliminary Securities and Exchange Commission filing.
The Vanguard Multi-Sector Income Bond ETF Shares (VGMS) seeks to provide total return while generating a moderate to high level of current income by investing in a variety of high-quality, medium-quality and junk bonds across several fixed-income sectors.
“Active fixed-income ETFs sit at the intersection of capabilities where we have a track record of success,” Vanguard said in a written statement shared with etf.com by spokesperson Jessica Schifalacqua. “Vanguard Multi-Sector Income Bond ETF will be actively managed, enabling the portfolio managers to seek the best opportunities within their investable universe while remaining risk aware.”
VGMS, which is expected to start trading June 9, will under normal circumstances invest in at least 80% of its assets in bonds, which include corporate and emerging market bonds, U.S. Treasuries and other U.S. government and agency securities, according to the filing. The annual expense ratio is slated to be 0.3%.
While the new ETF will be distinct from the existing mutual fund, Vanguard Multi-Sector Income Bond Fund (VMSAX), both products will have similar characteristics, alpha targets and total return expectations, according to the statement from Vanguard.
“We would expect small differences between the products due to the ETF’s daily disclosure requirements and cash flow impact to portfolio management decisions,” the company added.
VGMS joins Vanguard’s slate of five actively managed fixed-income ETFs:
In January, the fund manager also announced plans to launch the Short Duration Bond ETF (VSDB) in April.
The firm first entered the active fixed-income ETF space in April 2021 with VUSB.
“We expect the active fixed-income ETF product space to see continued growth as ETFs become the vehicle of choice for a wider array of investors,” Vanguard’s statement said. “We continue to monitor industry trends and client preferences and believe we are well positioned to offer products that meet client needs.”
