Vanguard’s new CEO, Salim Ramji, is keeping his word—at least when it comes to expanding the firm’s actively managed bond exchange-traded fund (ETF) lineup.
Today, Vanguard filed plans with the SEC to launch Short Duration Bond ETF (VSDB). This follows the opening of two actively managed municipal bond ETFs in November and the recent announcement of plans to introduce two cash-like bond ETFs.
Short Duration Bond ETF, which should go live in April, will invest in corporate bonds, Treasurys and mortgage-backed securities. While the bulk of the holdings will be high- and medium-quality bonds, the managers (Arvind Narayanan and Thanh Nguyen) can invest up to 25% of the portfolio in junk (or below investment grade-rated) bonds.
The new ETF’s closest in-house ETF competitor will be Short-Term Bond ETF (BSV). However, I expect it will be more similar to the actively managed Short-Term Investment-Grade (VFSTX) mutual fund. Time will tell if Narayanan and Nguyen take the same corporate bond-heavy approach as the active mutual fund, but I think it’s likely given that Narayanan is a co-manager of Short-Term Investment-Grade. (This is Nguyen’s first portfolio manager assignment.)