Vanguard this week launched two low-fee index municipal bond ETFs — the Vanguard Long-Term Tax-Exempt Bond ETF (VTEL) and the Vanguard New York Tax-Exempt Bond ETF (MUNY) — geared toward investors who prefer passively managed funds.
The exchange-traded funds, with 0.09% expense ratios, are managed by Vanguard Fixed Income Group.
“Vanguard’s ongoing expansion of our bond ETF lineup empowers financial advisors and individual investors with low-cost and highly diversified options to tap into the municipal bond market,” said Sara Devereux, Vanguard Fixed Income Group global head. "These ETFs bring together our unparalleled institutional-quality municipal bond expertise with some of the lowest costs in the industry, setting a new standard in the market.”
Vanguard New York Tax-Exempt Bond ETF is designed for tax-sensitive residents of New York, while Vanguard Long-Term Tax-Exempt Bond ETF serves investors looking for exposure to longer duration municipal bonds, low fees, tax-efficiency and trading flexibility, the company said.
VTEL expands clients' ability to construct a portfolio with a broad range of national municipal portfolio exposures with Vanguard ETFs, while MUNY helps ensure that investors in New York can access municipal bonds from their state through a low-cost, high-quality ETF, Vanguard said.
Vanguard’s municipal lineup now comprises six index ETFs, two active ETFs, 12 active mutual funds, one index mutual fund and three money market funds.
Jeff DeMaso, who edits The Independent Vanguard Advisor, said in his newsletter the ETFs are practical additions to the company's municipal bond lineup.
While the expense ratios are competitive by industry standards, they don't offer a cost advantage over Vanguard’s legacy actively managed Long-Term Tax-Exempt and New York Long-Term Tax-Exempt funds' Admiral shares, which carry the same ratio, but with a $50,000 minimum investment, he wrote.
"So, if you are willing to own a mutual fund — over an ETF — you can get Vanguard’s active management for free!" DeMaso wrote. "That’s a good deal in my book."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.