Vanguard High-Yield Active ETF

VGHY

Market cap $103M

Many advisors and investors are contemplating or actively adjusting their portfolios for the new year. That's why the insights gathered from attendees at last week's VettaFi 2026 Market Outlook Symposium were so compelling.

The growing demand for artificial intelligence (AI) has given a boost to the stock market.

With long end yields elevated, fixed income remains attractive across multiple segments. Rate cuts, corporate earnings, and stable credit markets are supportive to Vanguard's VGHY and VCIT.

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.

When it comes to inflows this year, Vanguard continues to prove it's in a league of its own. The ETF juggernaut has amassed $315.9 billion in inflows as of November 11, which is 30% higher compared to the same time a year ago.

The equity arena is certainly booming with cheers following the Fed's second rate cut. But the reaction from the fixed income crowd might be more mixed.

Vanguard High Yield Active ETF (VGHY) marks a notable expansion into junk bonds, diverging from Vanguard's traditional low-cost, broad index offerings. VGHY is actively managed, aiming to outperform the high-yield market, but its 0.22% expense ratio is only competitive among active peers, not index ETFs. Early portfolio data shows solid diversification, but it's too soon to judge VGHY's performance or risk profile compared to established competitors.

Active fixed income ETFs have been quite popular thus far in 2025. However, following the Fed's rate cut, we expect demand to persist into yearend and into 2026.

Vanguard continues to bolster its active ETF lineup with a new, high yield fund — the Vanguard High-Yield Active ETF (VGHY). It's the first high yield active ETF from Vanguard, bringing their current active ETF roster to nine funds.