Vanguard launches new multi-factor fund and active ETF and names new head of its Quantitative Equity Group
Vanguard | 10 April 2019
Vanguard today announced the launch of a new global multi-factor fund and ETF, adding to its growing range of factor products.
Following the successful launch of value and minimum volatility factor ETFs this time last year, Vanguard is introducing a core equity solution which offers a diversified portfolio of global shares, aiming to outperform the benchmark by optimally combining three factors – value, momentum and quality.
Vanguard describes factors as the underlying attributes that influence how an investment behaves. By targeting these attributes, factor-based investments attempt to deliver an investment premium. A multi-factor strategy may suit investors and advisers who want to incorporate factor strategies into portfolios but prefer not to have to select or rebalance between single factors.
The Vanguard Global Multi-factor Fund for wholesale investors and the Vanguard Global Multi-factor Active ETF (Managed Fund) (ASX: VGMF) are open for investment from today, competitively priced at 0.35% p.a. and 0.33% p.a. respectively.
Speaking about the launch, Vanguard's investment product strategy manager, Rachel White, commented, "We are delivering on our commitment to offer investors more low-cost active fund options with the addition of this multi-factor strategy, which has been sought after by advisers following the introduction of our value and minimum volatility factor offerings.
"Globally we've seen good adoption of this multi-factor strategy with the blending of factors helping to smooth returns, reduce downside risk and provide diversification benefits.
"Investors can use the Fund or ETF as a core global equity holding which can act as a lower cost substitute to a high cost active equity strategy. The strategy could also complement an index portfolio for investors seeking to add outperformance potential while maintaining low costs.
"While some factor offerings in the market track a static benchmark, we believe through actively managing our factor portfolios we can provide investors with a more consistent factor exposure, weighting shares according to their exposure to each factor rather than by their market capitalisation. Active implementation helps to keep costs to a minimum by carefully evaluating the trade-off between rebalancing needs and trading costs."
New head of Vanguard's Australian Quantitative Equity Group
Vanguard's new multi-factor strategy will be managed by Vanguard's Quantitative Equity Group (QEG) who employ rules-based active management to provide targeted and consistent exposure to factors in this strategy in a highly diversified, low cost and transparent way.
Joining Vanguard's global QEG leadership team, long-standing senior investment executive, Alla Kolganova, has been appointed to lead the Australian QEG team as current head, Mike Roach, transitions into a new role as Head of US Equity Operational Risk at Vanguard's US headquarters in Malvern, PA.
Alla joined Vanguard in February 2000, and has since held a range of senior roles within Vanguard's Investment Management Group, notably as Head of Australian Equities and Property Securities, and Head of Equities, Asia Pacific. In 2015 she moved to Vanguard's UK team to lead the equity index portfolio management and trading team in Europe. Alla returned to Australia in 2018 to join the Vanguard's Investment Strategy Group as a Principal and Senior Investment Strategist.
Head of Investment Management Group, Asia Pacific, Daniel Reyes, welcomed Alla and thanked Mike for his prominent role in bringing active management to Vanguard's Australian investors. He commented also on Vanguard's QEG function, "Vanguard's Quantitative Equity Group is efficiently staffed with a deep bench of credentialed professionals who are supported by the larger Vanguard organisation to leverage the best practices, low-cost execution and expertise of traders in multiple markets around the globe.
"QEG's collaborative approach over the past 30 years sets them apart from many competitors. They seek to add value through low costs, diversification and predictability relative to an index, as opposed to relying on star managers or key individuals."
Lowering the cost of active management in Australia
While best known in Australia as a leading index manager, Vanguard is a leader in active management with over $1.5 trillion of funds under management in active products, representing around a quarter of our assets globally. We are the second largest provider of actively managed portfolios in the U.S. and the fifth largest provider of active management globally. Vanguard has successfully lowered the cost of investing across the globe within both index and active investment solutions. The expansion of our active product line-up in Australia will continue to deliver on this fundamental commitment, removing a significant hurdle to active funds' outperformance and increasing the chance of success for investors.
To provide choice for investors based on their unique needs we are committed to expanding our range of active investment solutions in the coming years.