Vanguard is expanding its municipal bond ETF lineup. For investors who prefer index funds and the ETF structure, that’s a win. For everyone else, well, more choice isn’t always better.

On Friday, Vanguard filed with the SEC to launch two new tax-exempt bond ETFs: Intermediate-Term Tax-Exempt Bond ETF (VTEI) and California Tax-Exempt Bond ETF (VTEC). The funds are due out on January 26, 2024, expect to charge 0.08% (or eight basis points) and will aim to track indexes maintained by S&P.

Vanguard has been managing municipal bond funds for decades—but it has been chiefly an active affair. Vanguard’s first tax-exempt bond index fund—Tax-Exempt Bond Index—was introduced only eight years ago in 2015. The fund offers an Admiral (VTEAX) and an ETF (VTEB) share class.  Vanguard's only other index-based municipal bond fund—Short-Term Tax-Exempt Bond ETF (VETS)— was launched earlier this year.

The two soon-to-be-launched funds are a natural next step in expanding the lineup. However, neither fund really offers Vanguard investors anything new. We already have low-cost options in the portions of the market that the new ETFs will target.

In the table below, you can compare the expense ratios of the new ETFs and the existing Vanguard funds they’ll compete against. I’ve also included the assets of the existing funds broken down by their various share classes.

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