Vanguard Short Duration Bond ETF

VSDB

Market cap $72.7M

As noted by TMX VettaFi Head of Research Todd Rosenbluth, fixed income ETFs are having a banner year amid record inflows. The Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX) were two of the top funds responsible for the $325 billion in net inflows (as of October 15).

It might be auspicious timing that the VettaFi Q3 Fixed Income Symposium came less than 24 hours after the Federal Reserve instituted the first rate cut of the year. With that, investors must know how to navigate the current fixed income environment in which a Fed is easing monetary policy.

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.

A Morningstar report compared the performance of a collection of short-term bond funds versus a core index. The result was the short-term bond collective outpacing the core index, making them an ideal alternative in the current times of sticky inflation.

In the capital markets, it's a generally accepted principle to put cash to use as opposed to letting it sit idly on the sidelines. This also applies when planning for future expenses and one way to wake up cash is to park it into short duration bond ETFs.

The Vanguard S&P 500 ETF (VOO) and Vanguard Total Stock Market ETF (VTI) are prime examples of what has been the bedrock of Vanguard's ETF strategy: offer low-cost, passive funds. That's amassed them insurmountable assets under management over the years.

These bond ETFs from Vanguard hold promise.

Today, Vanguard released the Vanguard Short Duration Bond ETF (VSDB), the latest offering in the firm's fixed income suite.  VSDB's objective is to generate strong income while limiting a portfolio to potential price volatility.

Friday's rip-roaring jobs report has pushed the betting markets to price in a single rate cut for the entire year of 2025. Many top Wall Street brokerages have now revised their rate forecasts.

Inflation appears to be stickier than originally anticipated. That said, a heavy dose of uncertainty now exists with interest rate policy, warranting an active management strategy inherent in the Vanguard Short Duration Bond ETF (VSDB).