VALLEY FORGE, PA (February 15, 2018)—Vanguard today launched six new factor-based ETFs—the firm’s first actively managed ETFs in the U.S.—and one factor-based mutual fund.
Vanguard’s five single factor funds seek to achieve specific risk or return objectives through targeted factor exposures—minimum volatility, value, momentum, liquidity, and quality—and will have an estimated expense ratio of 0.13%. The sixth ETF and mutual fund follows a multi-factor approach and has an estimated expense ratio of 0.18%.
“The newly launched factor funds further broaden our active equity lineup and represent a differentiated approach – disciplined, rules-based, targeted exposure to factors – along with Vanguard’s low costs,” said Vanguard CEO Tim Buckley. “The funds are aimed primarily at financial advisors and institutional investors, who we believe understand the risks of potential underperformance and can effectively incorporate factor funds into their portfolios.”
The newly launched U.S. factor funds serve as an extension of Vanguard’s low-cost active fund lineup. With $1.2 trillion in global active assets, Vanguard’s deep roots in active management date back to the founding of Vanguard Wellington Fund in 1929—the nation’s oldest balanced mutual fund. A focus on low costs, rigorous fund oversight, and access to a diverse group of talented managers has contributed to a history of competitive performance. Vanguard’s actively managed funds outperformed their peer group averages over the past 5- and 10-year periods—91% and 93%, respectively.1
The new funds will be managed by Vanguard Quantitative Equity Group (QEG). Established by Vanguard founder John C. Bogle and then-Chief Investment Officer Gus Sauter, QEG is Vanguard’s third largest active equity manager, overseeing more than $39 billion. QEG serves as manager to 44 mandates globally, including all Vanguard factor funds offered to investors abroad and the firm’s first active U.S. factor mutual fund, Vanguard Global Minimum Volatility Fund. QEG oversees a variety of strategies, including traditional alpha, factors, liquid alternatives, and managed payout.
Promoting factor education
To complement the launch of the funds, Vanguard Financial Advisor Services (FAS) introduced an Education Center—a comprehensive website featuring product information, research, and education on factor funds and factor investing. The center features Vanguard’s latest research on factor investing, including Equity factor-based investing: A practitioner’s guide, How to use factor-based investing in client portfolios, and Drawing systematic value from the equity liquidity premium.
“The launch of our factor products and education center underscores our commitment to financial advisors,” said Tom Rampulla, Managing Director-FAS. “Advisors have gravitated to our low-cost ETFs and index funds, and now they will have a suite of low-cost active factor funds to help them build portfolios for their clients.”
FAS provides products, support, research, tools, and content to registered investment advisors, broker dealers, banks, and other intermediaries. FAS has grown to be Vanguard’s largest business with $1.7 trillion in assets. More than half of Vanguard’s $369 billion in cash flow in 2017 was attributed to Vanguard’s advisor clients.
Vanguard is one of the world’s largest investment management companies. As of December 31, 2017, Vanguard managed $4.9 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 385 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
All figures as of December 31, 2017, unless otherwise noted.
1 Source: Vanguard and Lipper, as of December 31, 2017.
*For the five-year period ended December 31, 2017, 106 of 116 Vanguard actively managed funds outperformed their peer group averages. For the ten-year period ended December 31, 2017, 103 of 111 Vanguard actively managed funds outperformed their peer group averages; results will vary for other time periods. Only funds with a minimum five-, or ten-year history, respectively, were included in the comparison. (Source: Lipper, a Thomson Reuters Company) Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at www.vanguard.com/performance.
For more information about Vanguard funds and ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
All investing is subject to risk, including the possible loss of the money you invest. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility.
Factor funds are subject to investment style risk, which is the chance that returns from the types of stocks in which the fund invests will trail returns from U.S. stock markets. Factor funds are subject to manager risk, which is the chance that poor security selection will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.