Vanguard, the long-time pioneer of passive investing, is now offering bond investors a new choice with the introduction of the Vanguard High-Yield Active ETF (BATS:VGHY). It’s the first active strategy the company has rolled out to the high-yield segment of the market, also raising the company’s active ETF total to nine.
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VGHY’s launch comes on the heels of a flurry of action from the giant fund earlier this year, when it launched three other active fixed income funds: the Vanguard Short Duration Bond ETF (BATS:VSDB), the Vanguard Multi-Sector Income Bond ETF (BATS:VGMS), and the Vanguard Government Securities Active ETF (NYSE:VGVT). The timing reflects a broader 2025 industry trend, active ETFs are taking a larger slice of attention as investors look for flexibility in an evolving rate environment.
What VGHY Provides
Whereas index-based funds attempting to track the high-yield market allow managers little leeway, VGHY provides them with some flexibility. The fund will be rooted in high-yield bonds but also have access to similar sectors like leveraged loans and U.S. investment-grade corporates. Such flexibility might be important, as junk bonds are cyclical and frequently unpredictable in nature.
Expenses are yet another attraction. With an expense ratio of just 0.22%, VGHY costs less than half the industry average and is solidly in the low-cost category despite offering active management.
Supporting the strategy are the Vanguard Fixed Income Group, a group responsible for managing well over $1 trillion in actively managed fixed income securities worldwide, from emerging markets and corporate debt to structured products and munis.
For return-seeking investors, the fund offers Vanguard’s lineup a new twist: an inexpensive, actively managed means of seeking returns in one of the bond market’s more murkier territories.
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