Three factors set our index funds apart: Our people, our process, and our chosen benchmarks.
We have a well-staffed, diverse team of experts whose skills include trading and execution, portfolio management, and fundamental credit analysis. Investors often hear that there is nothing “passive” about indexed fixed income funds, and this is accentuated in a municipal market with tens of thousands of unique issuers. So even for a passive portfolio, that knowledge and expertise is crucial for closely replicating index returns. We’re all located here at our Malvern headquarters, which gives us the unique ability to gain efficiencies, be more productive, and respond to unusual situations as they unexpectedly arise. All of these advantages have translated to exceptionally low tracking error.
Our team is solely focused on tracking the benchmark as closely as possible. There are no surprises or style drift. We do what we say we’re going to do. We believe this approach ultimately enhances the client experience.
Finally, before we launched VTES, we put a considerable amount of effort into selecting the most appropriate benchmark. Our goal with this portfolio is to optimize the trade-off between interest rate sensitivity and our ability to maximize the investor’s tax-exempt income. Ultimately, we were looking for the ideal duration and yield when compared to the central tendencies of existing passive short-term munis. Months of research and testing went into our benchmark selection; we wanted to provide an optimal experience for the shareholder looking for exposure to the front end of the yield curve.