Vanguard Intermediate-Term Corporate Bond ETF Yields Higher Than Municipal Bonds
What happened
The Vanguard Intermediate-Term Corporate Bond ETF invests in U.S. dollar-denominated investment-grade fixed income securities issued by industrial, utility, and financial companies. The fund, which holds 2,342 holdings with maturities between five and 10 years, offers a 1.92 percentage point yield lead over iShares National Muni Bond ETF. The Vanguard fund has an expense ratio of 0.03%, compared to 0.05% for the municipal bond ETF.
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Why it matters
Fixed-income investors must weigh the higher yields available in the corporate debt market against the tax advantages of municipal bonds. While the Vanguard ETF is slightly more affordable, it introduces corporate credit risk and historically higher volatility compared to municipal bonds.
From fool.com
Who's involved
- VanguardManages the Vanguard Intermediate-Term Corporate Bond ETF
Possible ripples
Who this could reach next, traced step by step from the reporting. Possibilities worth considering, not forecasts.- RBC's portfolio may face corporate credit risk via VCITRBC's investment in VCIT exposes it to corporate credit risk and higher yieldsPossible
- How could Vanguard's corporate bond ETF appeal affect BlackRock's market share?VCIT's high yield and low cost may shift investor preference in the bond marketPossible
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The entities involved
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Vanguard
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