Vanguard Expands Tax-Exempt Bond Lineup With New ETF | ETF Trends

Vanguard announced plans to introduce the Vanguard Short-Term Tax-Exempt Bond ETF (VTES), a municipal bond index ETF, in the first quarter of 2023. The ETF is intended for investors seeking to generate tax-exempt yield in their portfolios while minimizing interest rate sensitivity. It will predominantly invest in short-term investment-grade municipal bonds and will track the S&P 0-7 Year AMT-Free Muni Bond Index.

“Vanguard provides a broad yet carefully constructed lineup of investment options tailored to the needs of our diverse investor base with the goal of giving them the best chance for investment success,” said Daniel Reyes, head of the Vanguard portfolio review department, in a news release. “The new Short-Term Tax-Exempt Bond ETF has been thoughtfully constructed for tax-sensitive investors with a short time horizon and low risk tolerance, in complement to our broad range of municipal bond strategies.”

VTES will complement Vanguard’s $199 billion lineup of municipal bond funds, including the Vanguard Tax-Exempt Bond ETF (VTEB), which has pulled in $11 billion of investor capital so far in 2022.

“Vanguard’s intermediate-term municipal bond ETF has gained significant traction with advisors in 2022 that sought the steady tax-free income the diversified fund provides at a low cost,” said Todd Rosenbluth, head of research at VettaFi. “We expect strong demand for a new less interest rate-sensitive product in 2023.”

VTES will have an estimated expense ratio of 0.07%.

For more news, information, and analysis, visit the Fixed Income Channel.