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Vanguard has launched a new suite of model portfolios focused on corporate bonds. The model portfolios, the Vanguard Target Maturity Corporate Bond ETFs suite, feature a lineup of 10 index ETFs.
The firm said that when combined, the suite provides an alternative to bond ladders and separately managed accounts for some investors, “combining the diversification, liquidity and trading efficiency of ETFs with the features of defined maturities traditionally associated with individual bonds,” according to its press release.
The move is in line with broader industry trends of advisors gravitating to model portfolios. A Cerulli report, for example, found 61% of surveyed advisors expect to give preference to model portfolios over funds of funds.
“As investors reassess fixed income’s role in portfolios, there is growing demand for approaches that provide the flexibility and control needed to address an increasingly broad set of investment goals,” Geoff Parrish, global head of fixed income indexing, said in a statement. The suite “combines the approach of holding bonds to maturity with the benefits of the ETF structure—providing professionally managed, broadly diversified exposure across corporate bond issuers and sectors in an efficient and cost-conscious wrapper.”
Each ETF in the suite has an expense ratio of 0.08%. The funds are managed by Vanguard through its fixed income group’s Global Bond Indexing team. Joshua Barrickman and Jake Riley serve as the portfolio managers responsible for the day-to-day management of the funds, each with more than 20 years of industry experience.
The new suite comes just about a year after the firm launched its first dynamic asset-allocation fixed-income model portfolios. Vanguard also has an array of equity-based model portfolios.
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