I was just reading about the Vanguard Core-Plus Bond ETF and the Vanguard Core Bond ETF, which are sort of like BND but actively managed, with low expense ratios of 0.20% and 0.10% respectively. They seem to be interesting alternative to BND in that they aim to outperform their indexes with a bit of active management. They're not available yet at Monex or the other Japanese brokerages so I'm thinking of having them in my firstrade account.
What are your top choices for US bond exposure? Any thoughts on these new actively managed US bond ETFs?
FUND ANNOUNCEMENT : DECEMBER 07, 2023
Vanguard Expands ETF Lineup with Two Active Bond ETFs
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Vanguard today launched Vanguard Core-Plus Bond ETF (VPLS) and announced that Vanguard Core Bond ETF (VCRB) will launch before year end. These two new actively managed bond ETFs offer clients broadly diversified fixed income exposure with low equity correlation and the potential to outperform broad bond benchmarks over the long-term.
“Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF offer clients diversified single-fund fixed income portfolios offering exposure to a range of sectors, qualities, and maturities,” said Sara Devereux, global head of Vanguard Fixed Income Group. "Offering these strategies through the convenience and flexibility of the ETF structure meets clients’ growing preference for ETFs and further expands access to our experienced and talented active fixed income team.”
Vanguard Core-Plus Bond ETF offers exposure primarily to U.S. investment-grade securities but will have flexibility to add allocations in sectors beyond the U.S. investment-grade bond market, such as U.S. high-yield corporates and emerging markets debt. It will have an estimated expense ratio of 0.20%, compared with an average of 0.75% for competing funds. Daniel Shaykevich, Brian Quigley, Arvind Narayanan, and Michael Chang will manage Vanguard Core-Plus Bond ETF.
Vanguard intends to launch Vanguard Core Bond ETF by year-end. The ETF will offer similar exposure to the Core-Plus Bond ETF but will have more modest allocations to riskier sectors such as U.S. high-yield corporates and emerging markets debt. It will have an estimated expense ratio of 0.10%, compared with an average of 0.58% for competing funds. The ETF will be managed by Daniel Shaykevich, Brian Quigley, and Arvind Narayanan. https://institutional.vanguard.com/insi ... 72023.html
Deep Blue wrote: ↑Mon Apr 29, 2024 5:33 am
Lower costs and hence better performance in the long run.
How strong is the evidence for that for passive vs active bond funds? It is more difficult for a bond fund to track in index because of the way one issuer has multiple bonds so they all have to do some active sampling but even the bonds indexes themselves are problematic because they concentrate risk in companies that issue the most debt (at least for indexes like the Agg that are weighting based on total bonds outstanding). Pimco is certainly not an unbiased source in this debate but they quote Morningstar in the attached brief pdf file that active bonds funds outperformed passive over 10 years for most bond categories (as of 2018). This is one of the reasons I am not using bond funds at all in my portfolio.
I just invest in a couple of soverign bond trackers, not corporate. The vast majority of my assets are in equity trackers, but I stuck my toes in the water with some gilt funds last year when the YTM was around 4.5% and the duration of the portfolio was 18 years.
Deep Blue wrote: ↑Mon Apr 29, 2024 11:44 am
I just invest in a couple of soverign bond trackers, not corporate. The vast majority of my assets are in equity trackers, but I stuck my toes in the water with some gilt funds last year when the YTM was around 4.5% and the duration of the portfolio was 18 years.
Thanks for sharing your experience. I'm also coming around to the idea that if I want bonds I will want them to be sovereign bonds so would probably choose individual US Treasury issues or TIPS. Currently I only have a few US I bonds (they finally had a decent fixed rate of 1.3% for issues during the 6 months ending today).