In an average year, roughly 200 new exchange-traded products come to market, but few new ETFs come courtesy of Vanguard, the second-largest U.S. ETF issuer behind BlackRock, Inc. (NYSE:BLK)'s iShares.
Count Tuesday as an exception, because Vanguard did launch a new ETF. The Vanguard Tax-Exempt Bond Index Fund, VANGUARD MUNICIPAL BOND FUNDS Vanguard Tax- (NYSE: VTEB), marks Vanguard's first municipal bond index fund.
Better late than never, and that is said because when news broke earlier this year that Vanguard would introduce a municipal bond ETF, the fund was expected to launch in the second quarter.
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Investor And Admiral Share Classes Aren't Overlooked
The Vanguard Tax-Exempt Bond Index Fund is also available to investors that prefer the mutual fund structure via Vanguard's Investor and Admiral share classes under the tickers VTEBX and VTEAX.
The Investor share class of the new municipal bond fund charges 0.2 percent per year, or $20 per $10,000 invested, and requires a $3,000 minimum investment, according to Vanguard.
The Admiral share class has an annual fee of 0.12 percent, but requires a $10,000 minimum investment.
Another Look At The ETF
VTEB, the ETF, also charges just 0.12 percent per year and does not require a minimum investment. VTEB's annual expense ratio of 0.12 percent makes it less expensive than 86 percent of competing tax-exempt municipal bond funds on the market, according to issuer data
VTEB's target benchmark is the S&P National AMT-Free Municipal Bond Index. It seeks to offer diversified exposure to the national municipal bond market, representing bonds with maturities across the yield curve and an effective duration between five to eight years. The index reflects a higher-quality, investment-grade universe that focuses on the more liquid portion of the market, according to a statement issued by Vanguard.
A Peek At Vanguard
Pennsylvania-based Vanguard is already one of the dominant issuers of fixed income ETFs. Prior to the debut of VTEB, Vanguard had 16 bond ETFs with more than $75 billion in assets.
Vanguard has a team of approximately 40 municipal bond investment professionals, including portfolio managers, senior credit research analysts, research associates and traders. The firm has a 15-person credit research team that performs detailed analysis on individual credits and collaborates closely with our portfolio managers and traders, according to the statement.
VTEB is the first new ETF introduced by Vanguard in over two years.
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