VALLEY FORGE, PA — Vanguard this week introduced its first actively managed bond ETF, managed by its in-house fixed income team. Vanguard Ultra-Short Bond ETF (VUSB) offers a low-cost, diversified option for investors seeking income and limited price volatility. The ETF, which is listed on the Chicago Board Options Exchange (Cboe), has an expense ratio of 0.10%, compared with the average expense ratio for ultra-short-term bond ETFs of 0.22%1.
“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 6 to 18 months,” said Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. “An 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.”
Vanguard states that the Ultra-Short Bond ETF offers a similar strategy to that of the $17.5 billion actively managed Vanguard Ultra-Short-Term Bond Fund, 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. The ETF provides investors and advisors the flexibility to trade at intraday market prices and invest by buying one share.
Experienced fund management
With more than $2.0 trillion globally in fixed income assets under management, Vanguard today is one of the world’s largest fixed income managers. Vanguard dedicates significant resources to attract and develop investment talent, employs sophisticated investment systems, and develops leading fintech solutions to expand their investment capabilities. Vanguard has offered ETFs since 2001 and seeks to meet the needs of a diverse set of investors. With the addition of Vanguard Ultra-Short Bond ETF, Vanguard now offers 20 U.S.-domiciled fixed income ETFs representing more than $300 billion in client assets.
Vanguard also announced that like their existing Ultra-Short-Term Bond Fund, the new ETF is co-managed by Samuel C. Martinez, CFA, Arvind Narayanan, CFA, and Daniel Shaykevich. Mr. Martinez has been with Vanguard since 2007 and has worked in investment management since 2010. He earned a B.S. from Southern Utah University and an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Narayanan has worked in investment management since 2002 and has been with Vanguard since February 2019. He earned a B.A. from Goucher College and an M.B.A. from New York University. Mr. Shaykevich, a principal at Vanguard, has worked in investment management since 2001 and has been with Vanguard since 2013. He earned a B.S. from Carnegie Mellon University.
1The average expense ratio for ultra-short-term bond ETFs is 0.22% as of February 28, 2021, according to Lipper, a Thomson Reuters Company.
All investing is subject to risk, including the possible loss of the money you invest. Investments in bonds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss.
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