Vanguard ESG U.S. Corporate Bond ETF

Vanguard ESG U.S. Corporate Bond ETF (VCEB) holds investment-grade U.S. dollar corporate bonds that track the Bloomberg MSCI US Corporate SRI Select Index. That index screens out companies tied to fossil fuels, weapons, tobacco, gambling and other businesses. Its 0.12% expense ratio is higher than broad corporate bond ETFs such as USIG (0.04%) and VCIT (0.03%), and it trailed those funds over one and three years through late October 2026.

• Over the year to Oct 27, 2026, VCEB returned -2.3%, 7th of 8 among similar funds.
• Its 5-year annualized return was -0.1%.
• Its worst full calendar year was 2022 (-15.2%); its best was 2023 (+8.5%).
• The deepest fall in its price history was 21.4% (Sep 22, 2021 to Oct 20, 2022), recovered by Oct 27, 2025.

As of Aug 31, 2026, the fund held 2,755 securities; the ten largest made up 1.56% of assets.

The bonds mature in 10.2 years on average (weighted by size), with an average coupon of 4.6%.

• Over the three months to Aug 31, 2026, investors added a net $2.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.10%, -1.70%, +0.40%.

VCEB is an index fund. It tries to match the Bloomberg MSCI US Corporate SRI Select Index rather than pick bonds by judgment. The index starts from the Bloomberg U.S. Corporate Index, a broad list of taxable, investment-grade corporate bonds in U.S. dollars. Investment-grade means the bonds are rated as having a relatively low risk of default. The index drops bonds that mature in under a year and issues with less than $750 million outstanding. It is market-weighted, so larger debt issues carry more weight.

Next come ESG (environmental, social and governance) screens based on MSCI data. The index removes companies with set levels of involvement or revenue in adult entertainment, alcohol, gambling, tobacco, nuclear, controversial and conventional weapons, civilian firearms, nuclear power, and thermal coal, oil or gas. It also removes companies that fail MSCI's ESG controversies test, have no woman on their board, or lack enough data to be assessed.

The fund puts at least 80% of net assets in index bonds. It uses sampling, which means it holds a group of bonds that together match the index's key risk traits instead of owning every bond. As of August 31, 2026, it had 2,755 holdings, and the 10 largest made up just 1.56% of assets. The largest were bonds from Wells Fargo, Morgan Stanley, Meta Platforms and Amazon. Average maturity was 10.2 years. The fund also held small Treasury futures positions. The prospectus lists portfolio turnover of 33%.

• VCEB charges 0.12% a year, versus an average of 0.07% for the similar funds below (6th of 8, cheapest first).
• Of that, 0.1% is the management fee; the rest covers other fund expenses.
• Using the prospectus's standard example, $10,000 invested would cost about $12 in the first year and $154 over 10 years (assuming a 5% annual return).

VCEB pays monthly income from a widely spread portfolio of investment-grade corporate bonds, but its roughly 10-year average maturity means its price moves noticeably when interest rates change.

VCEB could add monthly income to a retirement portfolio. Its trailing 12-month yield was 4.93% as of October 27, 2026. Its price swings have been much smaller than a stock fund's, but it is not a safe haven. It launched in September 2020, so it has no record from the 2008 crisis or the 2020 crash. As rates rose in the 2022 bear market, it fell about 18%. Its worst calendar year was 2022, a 15.28% loss. Its deepest drop, 21.4% from September 2021 to October 2022, took about 36 months to recover. A retiree who had to sell shares in 2022 would have locked in those losses. The 0.12% expense ratio, or $12 in the first year on $10,000 under the SEC's standard example, is above the 0.07% average for similar funds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).