Vanguard Launches Two Tax-Exempt Bond ETFs

BY PR Newswire | MUNICIPAL | 01/30/24 09:00 AM EST

VALLEY FORGE, Pa., Jan. 30, 2024 /PRNewswire/ -- Vanguard today launched Vanguard Intermediate-Term Tax-Exempt Bond ETF (VTEI) and Vanguard California Tax-Exempt Bond ETF (VTEC), two index municipal bond ETFs managed by Vanguard Fixed Income Group.

(PRNewsfoto/Vanguard)

"The continued expansion of our tax-exempt bond ETF lineup brings advisors and individual investors new ways to access the municipal market with a low-cost and diversified portfolio," said Sara Devereux, global head of Vanguard Fixed Income Group.

Vanguard Intermediate-Term Tax-Exempt Bond ETF is designed for tax-sensitive investors with an intermediate-term time horizon and a preference for passive management. The new ETF has an expense ratio of 0.08%, compared with the average expense ratio for competing funds of 0.37%1.

Vanguard California Tax-Exempt Bond ETF is for tax-sensitive investors residing in California with an intermediate-term time horizon and preference for passive management. The new ETF has an expense ratio of 0.08%, compared with the average expense ratio for competing funds of 0.27%1.

Investors and advisors continue to gravitate to the ETF structure for its tax efficiency and flexibility to trade at intraday market prices. In addition to these two new ETFs, Vanguard's $242 billion municipal bond lineup includes a wide range of active mutual funds, money market funds, and two other ETFs: Vanguard Tax-Exempt Bond ETF (VTEB), the firm's first municipal bond ETF, and Vanguard Short-Term Tax-Exempt Bond ETF (VTES).

Vanguard Fixed Income Group
For more than four decades, Vanguard Fixed Income Group has distinguished itself with deep investment capabilities, disciplined security selection processes, and rigorous risk management techniques. Vanguard is a pioneer in bond indexing and has successfully delivered tight benchmark tracking on a range of indexed fixed income strategies in both taxable and tax-exempt markets2.

About Vanguard
Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to tens of millions of individual investors around the globe - directly, through workplace plans, and through financial intermediaries. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com.

All figures as of December 31, 2023, unless stated otherwise.

1 Morningstar data as of November 30, 2023.

2 In each of the past three years ending September 30, 98% or more of Vanguard fixed income index assets have tracked their benchmarks within risk-established tracking tolerances. Risk-established tracking tolerances are performance thresholds used to evaluate an index fund's tracking of its stated benchmark and are part of a prudent risk management process. (Source: Vanguard.)

For more information about Vanguard funds or ETF Shares, contact your financial advisor to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

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.

All investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.

Vanguard Intermediate-Term Tax-Exempt Bond ETF and Vanguard California Tax-Exempt Bond ETF are not to be confused with the similarly named Vanguard Intermediate-Term Tax-Exempt Fund and Vanguard California Intermediate-Term Tax-Exempt Fund. These products are independent of one another. Differences in scale, certain investment processes, and underlying holdings are expected to produce different investment returns by the products. To obtain a prospectus for Vanguard Intermediate-Term Tax-Exempt Fund and Vanguard California Intermediate-Term Tax-Exempt Fund, please call 800-662-7447.

Vanguard Marketing Corporation, Distributor.

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SOURCE Vanguard

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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