Vanguard, Passive Giant, to Roll Out First Active ETFs in US

Five of the seven funds will be targeted at advisors, and will begin trading in the first quarter of 2018.

(Photo: AP) (Photo: AP)

The king of passive funds is expanding its presence in the active space. Vanguard said it plans to launch six factor-based ETFs and one factor-based mutual fund — five of which are targeted at financial advisors and institutional investors seeking to maximize value, momentum, liquidity and quality or to minimize volatility.

The funds have expense ratios from $0.13 to $0.18 and should begin trading in the first quarter of 2018. They represent the first actively managed ETFs to be sold by Vanguard in the United States; the firm currently offers factor ETFs in Canada and the United Kingdom. 

The mutual fund and ETFs will offer a multi-factor approach. It would have an investment minimum of $50,000.

“Our factor-based fund offerings serve as a valuable extension of our low-cost active lineup, providing additional ways for suitable investors to help meet their long-term objectives by targeting exposure to specific factors in the market,” said Vanguard Chief Investment Officer Greg Davis, in a statement.

“With Vanguard’s actively managed, rules-based approach to factors, investors can now harness well-known factor exposure in a more transparent and low-cost way,” Davis added.

The new suite of active factor offerings includes:

  • Vanguard U.S. Minimum Volatility ETF
  • Vanguard U.S. Value Factor ETF
  • Vanguard U.S. Momentum Factor ETF
  • Vanguard U.S. Liquidity Factor ETF
  • Vanguard U.S. Quality Factor ETF
  • Vanguard U.S. Multifactor ETF
  • Vanguard U.S. Multifactor Fund

The funds are being led by the Vanguard Quantitative Equity Group (QEG), which currently manages nearly $35 billion in assets across more than 35 investment mandates, including all Vanguard factor funds offered to investors abroad and the firm’s first active U.S. factor mutual fund, the Vanguard Global Minimum Volatility Fund, introduced in December 2013.

As of Oct. 31, Vanguard managed some $4.8 trillion in global assets invested about 370 funds worldwide.

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