Vanguard Announces Plans to Launch Ultra-Short Bond ETF

VALLEY FORGE, PA (January 19, 2021)-Vanguard today filed an initial registration statement with the Securities and Exchange Commission to launch Vanguard Ultra-Short Bond ETF. The actively managed ETF will offer a low-cost, diversified option for investors seeking income and limited price volatility. Vanguard Fixed Income Group will serve as investment advisor to the new ETF, which is expected to launch in the second quarter of 2021.

"We are excited to present investors with a new solution for managing short-term cash needs and to offer our world-class active fixed income expertise through an ETF," said Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. "Vanguard's history of competitive active performance is enabled by rigorous fund oversight, access to a diverse roster of active management talent, and our ability to keep costs low."

The ETF will invest in a diversified portfolio consisting of high-quality and, to a lesser extent, medium-quality fixed income securities, including investment-grade credit and government bonds. With an expected average duration of approximately one year, the ETF's interest rate risk sits between money market funds and short-term bond funds, offering investors a solution for anticipated cash needs in the range of six to 18 months. It will have an estimated expense ratio of about 0.10%, compared with the average expense ratio for ultra-short-term bond ETFs of 0.22%¹.

Vanguard Ultra-Short Bond ETF will be Vanguard's first active bond ETF. Vanguard currently offers the $16.0 billion actively managed Vanguard Ultra-Short-Term Bond Fund, which debuted in 2015. The new ETF will be separate from, but have a similar strategy to, the existing mutual fund and will offer investors and advisors the ability to trade at intraday market prices and invest by buying one share. The ETF will be managed by the same portfolio management team as the mutual fund.

A leading fixed income advisor

Since its inception in 1981, Vanguard Fixed Income Group has invested heavily in building its capabilities and expanding its product offer. It has since become one of the world's largest fixed income managers with $2.0 trillion in global assets under management and 190 investment professionals across the globe. The team employs deep investment expertise, disciplined security selection, and rigorous risk management techniques in its aim to deliver consistent outperformance with less downside risk. Ninety percent of Vanguard's actively managed bond funds have outperformed their peer group averages over the past three years².

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About Vanguard

Vanguard is one of the world's largest investment management companies. As of December 31, 2020, Vanguard managed $7.1 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 423 funds to its more than 30 million investors worldwide. For more information, visit vanguard.com.

All figures as of December 31, 2020 unless stated otherwise.

1 Source: Morningstar.

2 For the three-year period ended December 31, 2020, 47 of 52 Vanguard active bond funds outperformed their peer group averages. (Source: Lipper, a Thomson Reuters Company.) Results will vary for other time periods. Only funds with a minimum three-year history were included in the comparison. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at www.vanguard.com/performance.

A registration statement relating to Vanguard Ultra-Short Bond ETF has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the prospectus can be obtained from Vanguard

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 the possible loss of the money you invest. Investments in bonds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss.

Vanguard Marketing Corporation, Distributor.

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