News release

Vanguard Expands Tax-Exempt Bond Lineup with New ETF

VALLEY FORGE, PA (December 22, 2022)—Vanguard today announced plans to introduce Vanguard Short-Term Tax-Exempt Bond ETF (Ticker: VTES), a municipal bond index ETF that will be managed by Vanguard Fixed Income Group. Vanguard intends to launch the ETF in the first quarter of 2023.

“Vanguard provides a broad yet carefully constructed lineup of investment options tailored to the needs of our diverse investor base with the goal of giving them the best chance for investment success,” said Daniel Reyes, head of Vanguard Portfolio Review Department. “The new Short-Term Tax-Exempt Bond ETF has been thoughtfully constructed for tax-sensitive investors with a short time horizon and low risk tolerance, in complement to our broad range of municipal bond strategies.”

The ETF is intended for investors seeking to generate tax-exempt yield in their portfolios while minimizing interest rate sensitivity. It will predominantly invest in short-term investment grade municipal bonds and will track the S&P® 0-7 Year AMT-Free Muni Bond index. The ETF will have an estimated expense ratio of 0.07%, compared to 0.54%1 for the average short-term bond fund.

A global fixed income leader
For more than 40 years, Vanguard Fixed Income Group has distinguished itself with deep investment capabilities, disciplined security selection processes, and rigorous risk management techniques, resulting in consistent, long-term performance. Vanguard’s track record remains unparalleled—87% of Vanguard bond funds outperformed their peer group averages over the ten-year period ending September 30, 2022.2

Vanguard's $199 billion municipal bond lineup includes a wide range of actively managed national, state-based, high-yield, and money market funds, as well as the $20.8 billion Vanguard Tax-Exempt Bond ETF (Ticker: VTEB). The new ETF will complement our existing actively managed limited-term and ultra-short-term tax-exempt mutual funds.

Vanguard's municipal bond team comprises 40 tenured portfolio managers, traders, and analysts that leverage their deep experience, scale, and sophisticated processes to navigate this complex segment of the fixed income market. Stephen McFee, a portfolio manager in Vanguard Fixed Income Group, will manage the new fund. Mr. McFee joined Vanguard in 2005 and currently manages multiple municipal bond funds, including Vanguard Tax-Exempt Bond Index Fund.


About Vanguard
Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to individual investors, institutions, and financial professionals. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit

All figures as of November 30, 2022, unless stated otherwise.

1 Source: Lipper as of December 31, 2021.

2 For the ten-year period ended September 30, 2022, 75 of 86 Vanguard bond funds outperformed their peer group averages; results will vary for other time periods. Only funds with a minimum ten-year history were included in the comparisons. (Source: Lipper, a Thomson Reuters Company) Note that this competitive performance data represents past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at

For more information about Vanguard funds, visit to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including the possible loss of the money you invest. 

Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments. Investments in bonds are subject to interest rate, credit, and inflation risk.

Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.

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