Vanguard Expands Bond Offerings, Active Strategies Thrive
Vanguard, the $11 trillion asset manager, is expanding its bond offerings and seeing success in its active management strategies. The company is eyeing emerging market bonds and higher-quality high-yield bonds for investment, while also launching new actively-managed bond ETFs.
Vanguard's fixed-income portfolio management head, Greg Davis, has led the charge. Out of 48 active bond funds with a 10-year history, 44 outperformed their peer group averages. This success has led to the launch of four new actively-managed bond ETFs in 2025, adding to Vanguard's existing menu of 66 active bond funds.
Vanguard's active fixed-income assets now total $1.1 trillion, making it the second-largest player in this category, just behind BlackRock's $1.2 trillion. The company's multi-sector bond mutual fund (VMSAX), launched in 2021, and the Multi-Sector Income Bond ETF (VGMS), launched in May 2025, have contributed to this growth. Notably, the ETF has a fee of 0.30%, higher than Vanguard's average but lower than the peer group average.
Vanguard's nine active bond ETFs, launched since 2021, hold more than $10 billion in assets, demonstrating strong investor demand.
Vanguard's latest 'time-varying' asset allocation model recommends a 70% allocation to bonds and 30% to stocks, reflecting the company's confidence in the fixed-income market. The Multi-Sector Income Bond Fund, geared towards credit-focused investments, has about half of its holdings rated BBB or higher, indicating a focus on higher-quality bonds.
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