Vanguard Core Tax-Exempt Bond ETF

VCRM

Market cap $648M

As 2025 winds down, a rocky beginning for municipal bonds is giving way to a smoother ride to the finish. In the latest iteration of its Active Fixed Income Perspectives, Vanguard noted a strong showing by municipal bonds in Q3.

The same macro factors affecting the equities market, such as tariffs, geopolitical factors, and a changing interest rate policy are also affecting the fixed income markets. With that, there's never been a better time to access active fixed income strategies that help advisors and investors navigate the murky macro environment.

Vanguard Core Tax-Exempt Bond ETF (VCRM) offers low fees, high credit quality, and index-tracking exposure to intermediate municipal bonds. VCRM's trailing yield is understated due to its short history; a more accurate annualized yield estimate is around 3.5%. The fund's focus on high-rated bonds and index tracking may limit returns compared to more selective or lower-rated muni strategies like SHYM.

Advisors may sometimes feel like they're venturing out to solve the world's personal financial problems alone. This applies to entrepreneurs managing their own firms and intrapreneurs who are part of an existing firm.

Lauded for their yield, credit quality, and of course, their federal tax-free income, municipal bond benefits are also extending into the containment of tariff contagion. A pair of funds that income investors should consider are the Vanguard Tax-Exempt Bond ETF (VTEB) and the Vanguard Core Tax-Exempt Bond ETF (VCRM).

The allocation into fixed income isn't just happening on a retail level. Increasingly, more allocation is happening with asset managers, including heightened interest in active management.

VCRM invests in high-quality muni bonds with a 3.6% tax-advantaged yield. After-tax income for the fund might be attractive for some investors. It compares unfavorably to some of its peers, especially BOXX.

The tax exempt status of municipal bonds could be in jeopardy as Congress mulls over whether to tax the income from these debt issues. In the meantime, Vanguard has eight ETFs to contemplate when looking to attain muni exposure.

“Show me the munis” has been a common refrain in the fixed income markets as of late. With municipal bond issuance continuing to reach elevated levels, here's an active option investors need to know about: the Vanguard Core Tax-Exempt Bond ETF (VCRM).

These bond ETFs from Vanguard hold promise.