A Vanguard Deep Dive: What's Next for Fixed Income | ETF Trends

The ETF industry is in the middle of the most unprecedented growth spurt in two decades, with over $560 billion in new assets already in 2021. For every ETF that’s closed in 2021, three more have launched. Into that maelstrom of activity, the team at Vanguard chose to launch a seemingly innocuous short-term bond fund, Vanguard Ultra-Short Bond ETF (VUSB), which rapidly became one of the fastest-growing ETF launches in history.

In the upcoming webcast, A Vanguard Deep Dive: What’s Next for Fixed Income, Vanguard’s principal and head of U.S. ETF capital markets, Janel Jackson, and co-head investment grade credit and senior portfolio manager, Arvind Narayanan, will talk about what’s behind the headlines, and why now is the right time for a new take on bonds.

For example, VUSB, which was launched in April, has already amassed $1.7 billion in assets under management.

The Vanguard Ultra-Short Bond ETF offers the features of an ETF structure for investors seeking an option for anticipated cash needs in the range of six to 18 months, according to Vanguard. The fund is designed to give investors low-cost exposure to money market instruments and short-term high-quality bonds, including asset-backed, government, and investment-grade corporate securities. The ultra-short strategy bridges the gap between money market funds offering a stable share price and short-term bond funds, which are meant for longer investment time horizons.

VUSB is a similar strategy to that of the much larger actively managed Vanguard Ultra-Short-Term Bond Fund (VUSFX), which debuted in 2015. Both the fund and the new ETF invest in diversified portfolios consisting of high-quality and, to a lesser extent, medium-quality fixed income securities, including investment-grade credit and government bonds. However, the ETF also provides investors and advisors the flexibility to trade at intraday market prices. VUSB also comes with a cheap 0.1% expense ratio.

Financial advisors who are interested in learning more about the fixed-income market can register for the Tuesday, October 5 webcast here.