Vanguard on Wednesday launched three exchange-traded funds focused on U.S. government bonds — the actively managed Vanguard Government Securities Active ETF (VGVT) and two index ETFs, Vanguard Total Treasury ETF (VTG) and Vanguard Total Inflation-Protected Securities ETF (VTP).
All three are managed by Vanguard Fixed Income Group.
“The actively managed VGVT leverages our fixed income expertise to deliver a flexible, high-quality portfolio of U.S. government and agency bonds, along with select securitized credit,” Roger Hallam, the fixed income group's global head of rates, said.
“VGVT is built to serve as a resilient core bond holding — one that adapts to changing market conditions while preserving the diversification and risk-buffering qualities investors expect" from Treasurys, he said, adding it may appeal to those seeking to balance equity exposure and long-term portfolio stability through active management.
VGVT, which seeks to outperform the broad Treasury market while maintaining diversification through Treasurys, has a 0.10% expense ratio and becomes Vanguard's eighth active bond ETF.
On the index fixed income roster, VTG offers a low-cost option for broad exposure to the U.S. Treasury market, with a 0.03% expense ratio, Vanguard said.
VTP, with a 0.05% expense ratio, provides long-term investors with a tool designed to protect their portfolios from inflation risk, the fund giant said. It offers exposure to the full spectrum of the U.S. TIPS market, complementing the existing Vanguard Short-Term Inflation Protected ETF (VTIP).
VTP has a broader investment universe and a longer duration profile, and could help hedge against inflation over extended periods, the company said.
Jeff DeMaso, Independent Vanguard Adviser editor, wrote that the new TIPS fund is a meaningful addition for ETF-only investors.
"Vanguard’s only other inflation-linked ETF, Short-Term Inflation-Protected Securities ETF (VTIP), sticks strictly to short-maturity bonds," while the new one includes TIPS with intermediate and long-term maturities, DeMaso wrote, noting TIPS are priced to beat inflation for the first time in roughly a decade.
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