Vanguard New York Long-Term Tax-Exempt Fund Investor Shares VNYTX

Vanguard New York Long-Term Tax-Exempt combines experienced leadership with a disciplined approach that stands out and delivers consistently strong results versus muni New York long Morningstar Category peers.

Deep muni market experience underpins the team’s stability and consistency. Industry veteran Adam Ferguson has led this portfolio since 2013 and makes the final calls on portfolio positioning and risks. The firm added Stephen McFee to the portfolio in late 2020 as a part of its long-term approach to succession planning, and he now leads several of the firm’s municipal strategies, including Vanguard Ultra Short-Term Tax-Exempt Bond.

A sizable cast of analysts and traders enhances the managers’ abilities to uncover relative value opportunities and provide a durable edge over many category peers. The firm also continues to invest in quantitative tools, which have improved this team’s efficiency.

A disciplined process and low fees create a meaningful advantage over peers. The team builds a diversified, high-quality portfolio that aims for strong risk-adjusted results; it measures those outcomes against a custom benchmark that loosely reflects a higher-quality version of the Bloomberg New York Municipal Index. Ferguson incorporates guidance from senior leaders on the macro framework, which includes duration, sector outlook, and positioning. He works with sector experts to refine the approach through security selection and taps into a dedicated risk team for ongoing portfolio oversight. Instead of making outsized bets on individual names, the team focuses on thoughtful structural trades along the muni curve and relative value opportunities across sectors.

This structure gives the managers flexibility to adjust the portfolio when they see value. For example, they selectively increased exposure to university revenue bonds, specifically high-quality institutions, after seeing improved valuations despite the political tensions of recent years. The December 2025 portfolio’s 9% stake stood roughly 3 percentage points higher than a year earlier.

The managers’ consistent execution and selective tilts have supported strong long-term absolute and volatility-adjusted returns. Since July 2013 (Ferguson’s first full month), the admiral shares’ 3.3% annualized gain through January 2026 outpaced roughly 80.0% of distinct peers and the index’s 2.8% return.

A disciplined, risk-conscious process continues to stand out from peers; the strategy earns an Above Average Process rating.

The team executes a well-defined investment framework that continues to add long-term value in the muni market. It manages an internal benchmark built from the investable universe of high-quality, liquid muni bonds, with characteristics broadly aligned with the Bloomberg New York Municipal Index. Vanguard’s senior investment committee, a group of fixed-income leaders, set the macro outlook, which guides duration, yield curve, and sector tilts. The muni sector teams offer more specialized insights and narrow the opportunity set through bottom-up security selection, using proprietary models that assess each bond’s fit with the strategy’s mandate. The managers integrate this research to position the portfolio relative to the custom index and work closely with a dedicated risk team that provides continuous oversight.

Given its ongoing ultralow-fee advantage, the managers do not need to take outsized bets to remain competitive. The team therefore treads lightly in more-volatile areas of the muni market, including segments such as Puerto Rico. As part of its risk discipline, the portfolio’s sector exposures and yield-curve stance rarely stray far from the internal benchmark. The team also keeps at least 4% of assets in cash and cash equivalents to maintain ample liquidity.

The managers keep the fund’s duration close to its internal benchmark, which has ranged between 5.0 and 9.0 years for the trailing five years ended December 2025, but adjust it with guidance from the senior investment committee, which may cause the fund’s duration to diverge from the Bloomberg New York Municipal Index. For instance, in 2025, they saw attractive value at the longer end of the muni yield curve and extended the overall duration; its 8.4-year duration as of December 2025 was two-fifths of a year longer than 12 months before.

This portfolio has historically kept a higher-quality bias relative to peers. The strategy’s 70% in higher-quality AA or above rated debt as of December 2025 was about 1 percentage point above the five-year average and 14 percentage points above the peer median.

The team emphasizes diversification and typically keeps at least 80% of assets, which is exempt from federal and New York State taxes: No position exceeds 1% of assets, and most represent only a handful of basis points. Local general-obligation bonds (13% as of December 2025), industrial development and pollution control (6%), and hospital revenue bonds (6%) are notable sector allocations. Despite the political pressure in recent years, the managers selectively added higher education bonds as they found attractive value. The fund’s 9% in this stake as of December 2025 was roughly 3 percentage points higher than a year ago.

The managers saw less attractive value in transportation revenue sectors, and they have trimmed these exposures in recent years. The fund’s 10% allocation in this stake as of December 2025 was roughly 2 percentage points lower than three years ago.

Seasoned leadership and deep supporting resources provide a clear edge over most peers; the strategy earns an Above Average People rating.

A veteran management team leads this strategy. Muni veteran Adam Ferguson has steered this strategy since 2013 and makes the final calls on portfolio positioning and risks. He has played a central role in shaping the broader muni suite’s positioning in riskier sectors such as healthcare, charter schools, and project finance, and he manages this portfolio alongside Stephen McFee, who brings more than two decades of industry experience; he joined the portfolio roster in late 2020 as a part of the firm’s long-term approach to succession planning. The duo has worked together for more than a decade at the firm, and their collaboration continues to strengthen.

They draw support from a seasoned analyst and trading team. This 28-member group averages more than a decade of industry experience and forms one of the largest muni research teams in the industry. The analysts provide both fundamental and relative value insights, which strengthen the team’s collaboration and improve the managers’ security selection process. Over the years, the team has also enhanced their toolkit with proprietary quantitative models, which further improved efficiencies.

Manager ownership, which reflects alignment with investors, could be better in the strategy and across the muni complex. McFee and Ferguson do not invest any money in the fund.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

Long-term absolute and volatility-adjusted returns are compelling.

Over lead manager Adam Ferguson’s tenure since July 2013 (his first full month), the admiral shares’ 3.3% annualized gain through January 2026 ranked in the top quintile of the muni New York long category and beat the Bloomberg New York Municipal Index by 46 basis points. The strategy’s information ratio (a measure of excess return over excess standard deviation versus the benchmark) topped all peers during the same period.

The portfolio’s higher-quality profile relative to most peers hasn't necessarily weighed on performance when markets are strong. In 2020, the strategy had a strong year even when the muni market recovered significantly after the first quarter’s pandemic-driven selloff; its 5.5% gain for the calendar year landed in the top quartile of distinct peers. In the choppy markets of 2022, the strategy provided some protection as the selection in university revenue bonds helped it lose 47 basis points less than its peers. However, its 10.9% loss that year was still painful in absolute terms.

When below-investment-grade bonds outperformed investment-grade debt in 2024, this fund remained competitive despite lower exposure to below-investment-grade debt. For example, the fund’s 2.0% return outpaced the index by 114 basis points but trailed its peer median just by 3 basis points.

In 2025, the fund’s overweight to industrial development housing revenue bonds contributed to outperformance. Over the full year, the fund’s 3.8% return outpaced almost all peers.

Vanguard NY Long-Term Tax-Exempt Inv's Prospectus Adjusted Expense Ratio is 0.14% per year. It places it in the cheapest quintile of the Morningstar US Fund Muni New York Long Category, where the median fee is 0.63% per year. This cost positioning translates into a Medalist Rating Price Score of 2.31, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.