VALLEY FORGE, PA — Vanguard has expanded its fixed-income exchange-traded fund lineup with the launch of the Vanguard U.S. High-Yield Corporate Bond Index ETF, adding a low-cost option for investors seeking exposure to below-investment-grade corporate debt as demand for income-producing assets remains elevated.
The new fund, trading under the ticker VCHY, tracks the Bloomberg U.S. Corporate High Yield 250MM 2% Issuer Capped Index and provides diversified exposure to U.S. dollar-denominated high-yield corporate bonds, Vanguard said.
The launch reflects continued competition among asset managers to attract investors seeking higher yields in a market where elevated interest rates have increased demand for income-generating investments while also renewing interest in fixed-income products.
With an expense ratio of 0.05%, Vanguard said the ETF ranks among the lowest-cost funds in the high-yield bond ETF category at launch. The index the fund tracks is designed to provide broad exposure to below-investment-grade corporate bonds while limiting concentration among individual issuers.
“The high-yield market is both sizable and growing in importance within fixed-income portfolios, yet much of today’s exposure sits in higher-cost structures,” Sara Devereux, chief investment officer of Vanguard Capital Management and global head of the firm’s Fixed Income Group, said in a statement.
Vanguard said the fund is intended to provide investors and financial advisors with a rules-based approach to incorporating high-yield credit exposure into diversified portfolios.
“Investors need access to a range of high-quality, low-cost solutions to help them meet their income and diversification goals,” Amma Boateng, managing director of Vanguard Financial Advisor Services, said in a statement. She added that the fund is designed to help advisors incorporate high-yield exposure while managing portfolio risk.
The ETF will be managed by Vanguard Capital Management’s Fixed Income Group, which oversees more than $2.9 trillion in assets globally, according to the company.
Joshua Barrickman and Manuel Hayes, both veteran fixed-income portfolio managers, will oversee the day-to-day management of the fund.
The launch adds to Vanguard’s expanding ETF platform and underscores the growing role of low-cost passive products in fixed-income investing, a segment historically dominated by actively managed funds.
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