Vanguard Finally Files for Junk Bond ETF Nearly Two Decades Later
An asset manager as big as Vanguard has the luxury of delaying fund launches without much consequence.
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Look who decided to show up.
Nearly two decades after some of its main competitors launched junk bond index exchange-trade funds, Vanguard is finally doing the same, according to a recent SEC filing. The US High-Yield Corporate Bond Index ETF (VCHY), expected to launch in June, will track Bloomberg’s US High Yield $250MM 2% Issuer Capped Index.
Both the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and State Street’s SPDR Bloomberg High Yield Bond ETF (JNK) debuted in 2007, but an asset manager as big as Vanguard ($12 trillion in AUM) has the luxury of delaying fund launches and not really suffering any consequences. “With ETFs, this has been [Vanguard’s] standard practice: Be late to the game and take market share through lower costs,” said Jeff DeMaso, editor of The Independent Vanguard Advisor. “Are they usually two decades late to something as straightforward as the high-yield bond market? No.”
HYG and JNK have expense ratios of 0.49% and 0.40%, respectively. DeMaso expects Vanguard’s new fund to charge significantly less since its High-Yield Active ETF (VGHY), which also focuses on the bond market and launched last year, has a management fee of just 0.22%.
Covering All the Bases
The high-yield bond market has done quite well these past few years:
- In 2025, it posted a third consecutive year of strong performance with a total return of 8.62%, according to Bloomberg.
- That followed 2023 and 2024 returns of 8.19% and 13.44% respectively.
At the same time, actively managed bond ETFs tend to outperform passive funds over periods of 10 to 15 years, according to Dan Sotiroff, senior manager research analyst for Morningstar. “When you look at the high-yield bond market, it hasn’t been the most attractive market to launch an index fund,” he told ETF Upside. “If you’re a reasonably good active manager, there’s a decent chance you can outperform an index after fees.”
Watch the Gap: It likely wasn’t market conditions that prompted Vanguard to add the fund, but rather gaps in its product lineup, Sotiroff said. “Fixed income has been a big initiative for them,” he said, noting that Vanguard launched 15 funds last year, the majority of which invested in fixed income. “That’s a huge year in terms of sheer numbers.”
