Some methods of generating passive income can be quite involved. For example, you could invest in real estate. But that typically entails managing the property or paying someone else to do it.

If you're looking for easy ways to make passive income, you might want to check out Vanguard's exchange-traded funds (ETFs). Vanguard has made investing simple for decades. And one of its funds should be especially attractive to income hunters. Investing $100,000 in this Vanguard ETF could generate over $6,800 in annual income.

A different twist on bonds

Vanguard offers over 20 ETFs that invest in bonds. However, the Vanguard Emerging Markets Government Bond ETF (NASDAQ: VWOB) provides a different twist from the others.

As its name indicates, this Vanguard ETF primarily owns bonds issued by the governments of countries with emerging markets. It attempts to track the performance of the Bloomberg USD Emerging Markets Government RIC Capped Index.

The ETF's holdings don't always exactly match the Bloomberg index's, though. As a case in point, the Vanguard Emerging Markets Government Bond ETF currently owns 727 bonds with a yield to maturity of 7.2% and an average duration of seven years. Its benchmark index owns 709 bonds with a yield to maturity of 7.8% and an average duration of 6.9 years.

While this Vanguard ETF primarily focuses on emerging-market bonds, it does have some other holdings. Currently, around 2.6% of the fund's assets are bonds issued outside of emerging markets, most of which were issued by European governments.

Vanguard is known for its low costs. The Vanguard Emerging Markets Government Bond ETF is no exception, with an annual expense ratio of 0.2%, which is well below the 0.97% average-expense ratio of similar funds.

An impressive income generator

Arguably, the best way to evaluate the yield of a bond ETF is to use the 30-day Securities and Exchange Commission (SEC) yield. This yield is calculated by annualizing the current-market yield to maturity of the bonds owned by the fund over a trailing 30-day period. The Vanguard Emerging Markets Government Bond ETF offers a 30-day SEC yield of 6.82% -- the highest by far in the Vanguard family.

The math is straightforward to determine how much annual income this Vanguard ETF could generate in a year. An initial investment of $100,000 would spin off $6,820 in income based on the ETF's current 30-day SEC yield.

There's also another plus for income investors. The Vanguard Emerging Markets Government Bond ETF pays its distributions monthly instead of quarterly.

Some drawbacks

This ETF does have a few drawbacks. Although it generates great income, its performance tends to be lackluster. Since the fund's inception in May 2013, its price has increased by an average of only 2.61% per year.

The yields of the Vanguard ETF also fluctuate. There's no guarantee that you'll be able to continue receiving as much income in the future with a $100,000 investment as you can now.

Unlike ETFs that own tax-free bonds (such as municipal bonds), all of the Vanguard Emerging Markets Government Bond ETF's distributions are taxable. This could lower your effective income somewhat.

Finally, the risk level of owning bonds issued by the governments of emerging markets is higher than owning bonds issued by the U.S. government. However, this ETF isn't super risky. Vanguard gives it a risk/reward rating of 3 on a scale from one to five.

Despite these drawbacks, the Vanguard Emerging Markets Government Bond ETF could be attractive to many investors. However, make sure if you buy this Vanguard ETF, it's part of an overall portfolio that's well diversified.

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Investing $100,000 in This Vanguard ETF Could Generate Over $6,800 in Annual Income was originally published by The Motley Fool