Indexed ETFs can provide an easy, cost-effective alternative for fixed income exposure that draws from myriad sources. However, investors could be missing out on the advantages associated with active management.
The Vanguard Multi-Sector Income Bond ETF (VGMS) offers actively managed, diversified exposure to both high yield and investment grade bonds with a short duration profile. VGMS is overweight corporate bonds, aiming for higher yields while maintaining risk control through active management. Given historically tight credit spreads, a dollar cost averaging (DCA) approach is recommended to smooth entry points and manage risk.
Vanguard continues its push into the active ETF market with the introduction of three news funds focused on equities. These are the Vanguard Wellington U.S. Value Active ETF (VUSV), Vanguard Wellington U.S. Growth Active ETF (VUSG), and Vanguard Wellington Dividend Growth Active ETF (VDIG).
Vanguard continues to bolster its active ETF lineup with a new, high yield fund — the Vanguard High-Yield Active ETF (VGHY). It's the first high yield active ETF from Vanguard, bringing their current active ETF roster to nine funds.
The Vanguard S&P 500 ETF (VOO) and Vanguard Total Stock Market ETF (VTI) are prime examples of what has been the bedrock of Vanguard's ETF strategy: offer low-cost, passive funds. That's amassed them insurmountable assets under management over the years.
Market uncertainty needs a tailor-made approach to fixed income for advisors to construct the ideal portfolio for their clients. There's an easier solution that encompasses an active management approach, various income sources, and low cost.