ETF Store Insight

Fixed Income ETFs Are Red Hot

November 25th, 2009 by ETF Store Staff

Innovation continues to loom amongst fixed income exchange traded funds as ETF providers launch new products and attract assets.  The influx of assets into fixed income ETFs has been so great that a research report, conducted by Pali Research, indicates that assets in fixed income ETFs have jumped by 67% since the end of 2008 (more on ETF innovation). 

Most recently, ETF provider Vanguard has added to the plethora of fixed income ETFs by launching seven new bond ETFs.  These ETFs all carry an expense ratio of 0.15% and seek to track a market-weighted bond index with a dollar weighted average maturity.  They include:

  • Vanguard Short-Term Government Bond Index Fund (NASDAQ: VGSH) which tracks the U.S. 1-3 Year Government Float Adjusted Index and seeks to track the performance of a market-weighted government bond index with a short-term dollar-weighted average maturity.
  • Vanguard Intermediate-Term Government Bond Index Fund (NASDAQ: VGIT) which tracks the U.S. 3-10 Year Government Float Adjusted Index and seeks to track the performance of a market-weighted government bond index with an intermediate-term dollar-weighted average maturity.
  • Vanguard Long-Term Government Bond Index Fund (NASDAQ: VGLT) which tracks the U.S. Long Government Float Adjusted Index and seeks to track the performance of a market-weighted government bond index with a long-term dollar-weighted average maturity.
  • Vanguard Short-Term Corporate Bond Index Fund (NASDAQ: VCSH) which tracks the U.S. 1-5 Year Corporate Index and seeks to track the performance of a market-weighted corporate bond index with a short-term dollar-weighted average maturity.
  • Vanguard Intermediate-Term Corporate Bond Index Fund (NASDAQ: VCIT) which tracks the U.S. 5-10 Year Corporate Index and seeks to track the performance of a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity.
  • Vanguard Long-Term Corporate Bond Index Fund (NASDAQ: VCLT) which tracks the U.S. Long Corporate Index and seeks to track the performance of a market-weighted corporate bond index with a long-term dollar-weighted average maturity.
  • Vanguard Mortgage-Backed Securities Index Fund (NASDAQ: VMBS) which tracks the U.S. MBS Float Adjusted Index and seeks to track the performance of a market-weighted U.S mortgage-backed securities index with an intermediate-term dollar-weighted average maturity.

Additionally, bond giant PIMCO recently launched a new product, the PIMCO Enhanced Short Maturity Strategy Fund (MINT), which is an actively managed short-term bond ETF that aims to preserve capital while also looking to offer more attractive yields than those earned from traditional money market funds.

ETF providers continue to innovate and introduce new products to market and the industry as a whole continues to grow and put pressure on mutual funds.