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Vanguard to Bolster Active Fixed Income Lineup with Two Active Municipal ETFs
VTES is passively managed. VSDM (Short Duration Tax-Exempt ETF) is actively managed.
VWSUX was until a year ago named Short-Term; it's now Ultra-Short-Term. I haven't checked whether the fund actually changed its portfolio then or just its name. It's a bit higher grade than VDSM. At least 75% in A range, at most 20% Baa and 5% junk. In comparison, VDSM can invest up to 20% in junk. Maturities are different. VWSUX shoots for 1-2 year average. VDSM is longer at 2-7 years. VDSM doesn't yet say what its expected duration will be.
VMLUX invests the same way as VWSUX (higher quality), just with longer maturities: 2-6 years. So in comparison, VDSM is lower quality and perhaps slightly longer maturities (2-7 years).
That makes VDSM higher risk, both credit risk and interest rate risk, than existing Vanguard actively managed muni funds. It's also slightly more expensive, with a 0.12% expense ratio compared to 0.09% for the existing funds' Admiral shares and 0.07 to VTES's cost.
Benefits? That's for you to decide, whether you want to go out a little further on the risk spectrum.
Likewise VCRM (Core Tax-Exempt ETF) looks to be more junky than existing funds, though its average maturity will be in the 3-10 year range.
Same comments apply. VTEI is passively managed, and both existing funds are cheaper than VCRM's 0.12% ER.
What you get with these new funds is active management in an ETF wrapper. That's new for Vanguard.
If one wants to go even shorter, Fidelity offers FMNDX with an average maturity of 1 year or less, same quality as Vanguard's existing funds (up to 20% junk), higher ER (0.25%), and no frequent trading restrictions.
My guess is to attract new asset with ETF wrappers since they can be traded in many brokerages outside of Vanguard. Vanguard mutual funds cost $75 to purchase at Fidelity. These new Vanguard ETFs are not clones of their equivalent OEFs. Thanks @msf.
ok, the summary i wanted to dig out...please correct as needed :
tax-exempt lineup discussed above :
- the current MFs are active - the current ETFs are passive - the ETFs are ~1-2bps cheaper (~10% cheaper on already very low amt) - the active ETFs are to debut 'sometime' in 2024
while the duration\maturity roughly follows the name (except high yield), the quality mix requires going into each fund page.
Comments
Vanguard comparison page
New funds' prospectus (draft)
VTES is passively managed. VSDM (Short Duration Tax-Exempt ETF) is actively managed.
VWSUX was until a year ago named Short-Term; it's now Ultra-Short-Term. I haven't checked whether the fund actually changed its portfolio then or just its name. It's a bit higher grade than VDSM. At least 75% in A range, at most 20% Baa and 5% junk. In comparison, VDSM can invest up to 20% in junk. Maturities are different. VWSUX shoots for 1-2 year average. VDSM is longer at 2-7 years. VDSM doesn't yet say what its expected duration will be.
VMLUX invests the same way as VWSUX (higher quality), just with longer maturities: 2-6 years. So in comparison, VDSM is lower quality and perhaps slightly longer maturities (2-7 years).
That makes VDSM higher risk, both credit risk and interest rate risk, than existing Vanguard actively managed muni funds. It's also slightly more expensive, with a 0.12% expense ratio compared to 0.09% for the existing funds' Admiral shares and 0.07 to VTES's cost.
Benefits? That's for you to decide, whether you want to go out a little further on the risk spectrum.
Likewise VCRM (Core Tax-Exempt ETF) looks to be more junky than existing funds, though its average maturity will be in the 3-10 year range.
Vanguard comparison page for VTEI, VWIUX
Same comments apply. VTEI is passively managed, and both existing funds are cheaper than VCRM's 0.12% ER.
What you get with these new funds is active management in an ETF wrapper. That's new for Vanguard.
If one wants to go even shorter, Fidelity offers FMNDX with an average maturity of 1 year or less, same quality as Vanguard's existing funds (up to 20% junk), higher ER (0.25%), and no frequent trading restrictions.
many here have been marching up daily last few months regardless of S&P500 ups\downs.
If 'twere only so.
Effective June 3, 2024, the transaction fee for Vanguard and Dodge & Cox mutual funds will increase from $75 to $100 per purchase.
https://www.mutualfundobserver.com/discuss/discussion/62254/fidelity-raising-fees-on-vanguard-and-dodge-cox-several-etfs-on-06-03-24
But be of good cheer. They're still only $74.95 at Schwab.
https://soundmindinvesting.com/articles/schwab-increases-transaction-fees-for-vanguard-and-fidelity-funds
tax-exempt lineup discussed above :
- the current MFs are active
- the current ETFs are passive
- the ETFs are ~1-2bps cheaper (~10% cheaper on already very low amt)
- the active ETFs are to debut 'sometime' in 2024
while the duration\maturity roughly follows the name (except high yield), the quality mix requires going into each fund page.