Vanguard, the second-largest U.S. issuer of exchange traded funds, is planning an addition to its fixed income suite.
“Vanguard today filed a preliminary registration statement with the Securities and Exchange Commission for a new index portfolio, Vanguard Total Corporate Bond ETF,” according to a statement. “The ETF is expected to launch in the fourth quarter and will offer investors access to the entire U.S. investment-grade corporate bond market through a single fund.”
Vanguard already offers an expansive lineup of low-cost bond ETFs, led by the Vanguard Total Bond Market ETF (NYSARCA: BND), which is one of the largest US-listed fixed income ETFs. Pennsylvania-based Vanguard currently offers three investment-grade corporate bond ETFs.
The new corporate bond ETF will be an ETF of ETFs, holding Vanguard three current corporate bond ETFs.
“The fund will be structured as an ETF of ETFs, investing directly in three existing, low-cost ETFs: Vanguard Short-Term Corporate Bond ETF (NASDAQ: VCSH), Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ: VCIT), and Vanguard Long-Term Corporate Bond ETF (NASDAQ: VCLT), according to the statement.
Related: Looking Beyond ETF Expense Ratios
Predictably, Vanguard is estimating the new ETF of ETFs will sport a low fee.
“This approach enables the Total Corporate Bond ETF to achieve immediate scale by using existing exposure from the underlying ETFs, and it is expected to result in tighter bid/ask spreads and lower operating expenses than investing directly in the benchmark’s constituents. Vanguard estimates an expense ratio of 0.07% upon the ETF’s launch,” according to the statement.
Vanguard last added to its fixed income lineup almost exactly two years ago when it launched the Vanguard Tax-Exempt Bond ETF (NYSEARCA: VTEB).
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