New Vanguard VGMS ETF Targets Bigger Bond Returns Beyond Treasuries

Vanguard is expanding its active fixed-income lineup by launching the Vanguard Multi-Sector Income Bond ETF VGMS.

The fund marks a deeper penetration into the high-yielding, actively managed territory, an increasingly popular lane as investors look for ways to offset interest rate uncertainty and calm inflation jitters.

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Unlike traditional bond ETFs that mirror broad indexes, VGMS will be run by a hands-on team aiming for income from across multiple fixed-income sectors — from investment-grade corporates to emerging market debt and structured products. The aim is to offer investors more juice than plain-vanilla bond funds deliver.

The strategy’s core is made up of three seasoned managers: Michael Chang, Arvind Narayanan, and Daniel Shaykevich. Each has more than two decades of experience in credit markets. Together, they’ll be free to rearrange allocations based on where they see value and risk in real-time.

With an expense ratio of 0.30%, VGMS is cheaper than the average actively managed bond ETF, living up to Vanguard's reputation for keeping costs low even when veering off the passive path.

The fund is Vanguard's seventh active bond ETF in the U.S., signaling growing confidence in actively managed vehicles, especially in markets where the usual rules no longer apply.

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