Vanguard this week launched its first active equity ETFs managed by human stock pickers — but not without a notable error in a regulatory filing leading up to the event, a Vanguard analyst notes.
The giant asset manager's Vanguard Wellington Dividend Growth Active ETF (VDIG), Vanguard Wellington U.S. Growth Active ETF (VUSG) and Vanguard Wellington U.S. Value Active ETF (VUSV) started trading this week; it first filed its plans for the funds in August.
Jeff DeMaso, who edits the Independent Vanguard Adviser, noted recently in his newsletter that in a regulatory filing last week, the company specified expense ratios for the ETFs ranging from 0.13% to 0.17%.
"The numbers caught my eye immediately; it looked like Vanguard was coming out swinging on fees — undercutting the competition by a mile. ... But no. Those ultra-low fees were, as Vanguard later admitted, the result of a 'human error,'" he wrote. "The correct expense ratios are between 0.30% and 0.40% — still competitive, but not industry-shaking."
The erroneously filed ratios were "shockingly low," he noted in one post about them. The actual fees sit at the lower end of the most popular active stock ETFs, DeMaso said.
"Look, everyone makes mistakes. But this episode is yet another reminder that Vanguard’s tech and operations still aren’t as buttoned-up as they should be. For a firm managing trillions, the margin for error should be a lot smaller," DeMaso wrote.
A Vanguard spokesman didn't immediately respond to an email Wednesday seeking comment.
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