Vanguard Announces Plans To Launch Total Corporate Bond ETF

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Aug 22, 2017, 09:15 ET

VALLEY FORGE, Pa., Aug. 22, 2017 /PRNewswire/ -- Vanguard today filed a preliminary registration statement with the Securities and Exchange Commission for a new index portfolio, Vanguard Total Corporate Bond ETF. The ETF is expected to launch in the fourth quarter and will offer investors access to the entire U.S. investment-grade corporate bond market through a single fund.

"The new offering complements our existing lineup of total market funds and will provide investors with low-cost, broadly diversified exposure to the U.S. investment-grade corporate bond market," said John Hollyer, global head of Vanguard Fixed Income Group.

The fund will be structured as an ETF of ETFs, investing directly in three existing, low-cost ETFs: Vanguard Short-Term Corporate Bond ETF (VCSH), Vanguard Intermediate-Term Corporate Bond ETF (VCIT), and Vanguard Long-Term Corporate Bond ETF (VCLT).

This approach enables the Total Corporate Bond ETF to achieve immediate scale by using existing exposure from the underlying ETFs, and it is expected to result in tighter bid/ask spreads and lower operating expenses than investing directly in the benchmark's constituents. Vanguard estimates an expense ratio of 0.07% upon the ETF's launch.

Vanguard, through its Fixed Income Group, will serve as the investment advisor to the ETF. The Fixed Income Group manages more than $350 billion¹ of both active and index corporate bond assets. With $1.2 trillion assets under management, the group is one of the world's largest bond fund managers and maintains investment operations in Malvern, PA; Scottsdale, AZ; London, England; and Melbourne, Australia.

Vanguard introduced the first bond index fund more than 30 years ago with the launch of Vanguard Total Bond Market Index Fund. The firm launched its first bond ETFs in the U.S. in 2007 and has since expanded its lineup globally.

Vanguard Total Corporate Bond ETF will be the first U.S.-domiciled bond ETF introduced by the firm since the Vanguard Tax-Exempt Bond Index ETF (VTEB), which began trading in August 2015.

"In recent years, we have been building out our ETF lineup to serve growing demand by our clients abroad," said Greg Davis, Vanguard's chief investment officer. "Since 2015, we have launched a total of 27 ETFs in Canada, Australia, Hong Kong, Switzerland, and the U.K."

Vanguard offers a range of total market funds, including:

Total Stock Market Index Fund
Total Bond Market Index Fund
Total Bond Market II Index Fund
Total International Stock Market Index Fund
Total International Bond Market Index Fund
Institutional Total Stock Market Index Fund
Total World Stock Index Fund

About Vanguard
Vanguard is one of the world's largest investment management companies. As of July 31, 2017, Vanguard managed $4.5 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 371 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.

Asset figures as of July 31, 2017, unless otherwise noted.

¹As of June 30, 2017

A registration statement relating to the Vanguard ETF shares has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

For more information about Vanguard funds and ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.

Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

All investing is subject to risk, including the possible loss of the money you invest.

Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.

SOURCE Vanguard