Vanguard set to launch actively managed factor-based funds in U.S.

By Sarah Lizee

Olympia, Wash., Nov. 28 – Vanguard Group, Inc. introduced six new factor-based exchange-traded funds and one factor-based mutual fund, representing the company's first actively managed ETFs in the United States, according to a press release.

The company currently offers suites of active factor ETFs in Canada and the United Kingdom. The new factor funds are expected to begin trading in the first quarter of 2018.

Five single factor funds are designed for financial advisers and institutional investors seeking to achieve specific risk or return objectives through targeted factor exposures, including minimum volatility, value, momentum, liquidity and quality.

The sixth ETF and fund will employ an active, rules-based quantitative approach in managing the funds which will also feature a low cost, the company said.

“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,” Vanguard chief investment officer Greg Davis said in the release.

“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.”

The five single factor-based ETFs will have an estimated expense ratio of 0.13% and the multifactor ETF and fund will have an estimated expense ratio of 0.18%. The multifactor fund will require a minimum initial investment of $50,000 for Vanguard’s “Admiral Shares.”

Vanguard Quantitative Equity Group will act as the investment adviser to the funds.

Valley Forge, Penn.-based Vanguard Group is an investment management company.

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