Vanguard Pennsylvania Long-Term Tax-Exempt Fund Admiral Shares VPALX

Vanguard PA Long-Term Tax-Exempt Adm holds a quantitatively derived Gold Morningstar Medalist Rating. The rating reflects that it has scored particularly well on factors Morningstar research associates with future outperformance relative to category peers.

People: High

The People Pillar assessment is based on quantitative measures of manager experience, track record, and alignment. Over periods of up to 10 years, the successful manager experience metric, calculated across the actively managed strategies the manager has run over that period, ranks above peers. Separately, we measure risk-adjusted excess return by analyzing managers' information ratios over the one-, three-, and five-year periods. These rank above peers, within the top 10% of peers, and within the top 10% of peers, respectively. Reported manager investment in the strategy is over USD 500,000, something our analysis indicates is correlated with better long-term performance.

Process: Average

The Process rating is driven by the fund's gross-of-fee information ratio, a measure of risk-adjusted excess return. Over one, three, and five years, it ranks slightly below peers, slightly below peers, and below peers, respectively. The parent firm's risk-adjusted success ratio, which measures the share of its fixed income funds that outperform peers, ranks within the top 10% of peer firms over 10 years.

Performance (in US Dollar)

Over the past 12 months, Vanguard PA Long-Term Tax-Exempt Adm share class returned 7%, outperforming both its category index, the Bloomberg Municipal 10 Yr 8-12 TR USD Index (6.6%), and its Morningstar category peers (6.1%). Across the 10-year period, the fund returned 2.7% per year, surpassing the benchmark (2.3% per year) and Morningstar Category average (1.9% per year).

Price

Vanguard PA Long-Term Tax-Exempt Adm's Prospectus Adjusted Expense Ratio is 0.09% per year. It places it in the cheapest quintile of the Morningstar US Fund Muni Pennsylvania Category, where the median fee is 0.68% per year. This cost positioning translates into a Medalist Rating Price Score of 2.38, 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.

Vanguard PA Long-Term Tax-Exempt Adm is assigned an Average Process rating. Our evaluation of a strategies' Process Pillar focuses on the effectiveness of its investment approach. A well-structured process should be clearly defined and consistently applied. This assessment incorporates quantitative measures of risk-adjusted returns, success ratio, and benchmark sensitivity to gauge the fund's ability to execute its strategy effectively over time.

Fund Information Ratio

We assess the strategy's ability to generate risk-adjusted excess returns relative to its Morningstar Category Index using the gross-of-fee information ratio. This is evaluated over one-, three-, and five-year periods where available. Here, the category-relative information ratio ranks slightly below peers over one year, slightly below peers over three years, and below peers over five years.

Brand/Asset Class Risk-Adjusted Success Ratio

The risk-adjusted success ratio gauges a firm's ability to deliver competitive results within each major asset class. It reflects the share of the firm's funds that both survived and outperformed the peer average over trailing three-, five-, and 10-year periods, where available. Based on the average performance of the group's fixed income fund offerings, the success ratio ranks above peers, relative to the other firms in the strategy's asset class over three years, above peers over five years, and within the top 10% over 10 years.

Benchmark Sensitivity

We assess R-squared to measure the extent to which a fund's returns move in line with its benchmark. In our analysis, funds in the bottom decile for R-squared (that is, those least correlated from their benchmark) have historically underperformed the rest of the universe. As a result, Process Pillars for these funds are subject to a small penalty. No penalty is applied to the strategy.

Vanguard PA Long-Term Tax-Exempt Adm earns a High People rating. The People Pillar assessment evaluates the factors that shape the managers' ability to deliver consistent returns. This methodology combines quantitative inputs to judge the investment team’s strength, alignment, and stability.

Manager Experience

We assess each manager's historical ability to outperform their Morningstar Category Indices by calculating the tenure-weighted net number of successful excess return months over the past ten years. This figure reflects the number of months in which each manager achieved positive gross-of-fee excess returns, minus those with negative excess returns, across actively managed funds. To calculate this, we look across all the actively managed strategies the manager has run within the last 10 years. The result is then weighted by the managers' tenure on the strategy. On this strategy, the successful manager experience metric ranks above peers.

Manager Information Ratio

We evaluate manager's skill in generating risk-adjusted excess returns using the gross-of-fee information ratio, defined as the average gross excess return divided by the average tracking error across all strategies under their management. The metric is evaluated across the one-, three-, and five-year periods, where available, with greater emphasis placed on longer-term performance to provide a comprehensive view of consistency over time. Here, the information ratio ranks above peers over one year, within the top 10% of peers over three years, and within the top 10% of peers over five years.

Manager Investment

We consider whether fund managers have personally invested at least USD 500,000 in the fund, as our analysis indicates that higher coinvestment levels are correlated with better long-term performance. A small upward adjustment to the score behind the People rating is given if this investment hurdle is met. That is the case here: The managers on this strategy invest over USD 500,000 in the fund.

Manager Retention

We assess manager stability by examining both average annual retention rates and average manager tenure at the branding company level over the past five years. A small deduction to the People Rating is applied if either metric falls within the bottom decile globally. This adjustment reflects the increased risk of key talent turnover, which can impact the long-term execution of the strategy. No negative adjustment is warranted.

Combining these factors creates a structured and data-driven framework to assess portfolio manager quality, balancing historical performance with forward-looking considerations such as alignment and team stability.

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.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Vanguard (Branding Name ID: BN00000AAL), is covered by Morningstar Manager Research.

Performance is evaluated in US Dollar, measured to the end of April 2026.

Short-Term Performance

Over the past 12 months, Vanguard PA Long-Term Tax-Exempt Adm share class returned 7%, outperforming its category index, the Bloomberg Municipal 10 Yr 8-12 TR USD Index (6.6%), and its Morningstar category peers (6.1%). Over the three-year period, it returned 3.9% per year, outperforming both the index (3% per year) and its Morningstar category peers (3.4% per year).

Long-Term Performance

Over five years, the fund returned 1.1% per year, ahead of the index (1% per year) and ahead of peers (0.6% per year). Over 10 years, the fund returned 2.7% per year, surpassing the benchmark (2.3% per year) and peer average (1.9% per year).

Vanguard PA Long-Term Tax-Exempt Adm's Prospectus Adjusted Expense Ratio is 0.09% per year. It places it in the cheapest quintile of the Morningstar US Fund Muni Pennsylvania Category, where the median fee is 0.68% per year. This cost positioning translates into a Medalist Rating Price Score of 2.38, 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.