Vanguard launches active factor ETFs

Vanguard | 16 April 2018


Vanguard today announced two new active factor Exchange Traded Funds (ETFs) will begin trading tomorrow on the Australian Stock Exchange - its first actively managed ETFs for Australian investors.

The new active ETFs – Global Value Equity (ASX: VVLU) and Global Minimum Volatility (ASX: VMIN) - offer practical and low cost investment options for investors seeking to gain factor exposure.

The funds seek to achieve specific risk and return objectives through factor exposures to global value and global minimum volatility, both offered at a low management expense ratio of 0.28 per cent.

Offering active management at a lower cost removes one of the most persistent barriers to active outperformance” said Daniel Reyes, Vanguard’s Asia-Pacific Head of Investments.

“This expansion of our ETF range offers more tools to help investors build well diversified portfolios – across and within asset classes and investment styles, and according to their appetite for risk.”

Managed by Vanguard’s Quantitative Equity Group (QEG) who employ rules-based active management to provide targeted and consistent exposure to factors in these active ETFs in a highly diversified, low cost and transparent way.

Michael Roach, Australian Head of QEG said “Factors are the DNA of an investment portfolio; the underlying characteristics that drive investment performance.

Vanguard is taking a different approach to other factor fund offerings in the market – we are actively managing these portfolios, weighting shares according to their exposure to each factor whilst maintaining a broadly diversified investment portfolio.

A major benefit of using active versus index management for factor implementation in these portfolios is that we reduce factor drift in the portfolio – rebalancing as needed rather than being tied to the index rebalancing date.

“These active ETFs carry with them all the usual benefits of Vanguard ETFs– they offer broad diversification, low cost, liquidity and are highly transparent.”

While best known in Australia as a leading index manager, the Vanguard Group has been actively managing assets since its establishment forty years ago. With approximately A$1.6 trillion in actively managed assets, Vanguard is the third largest manager of active funds globally.

Vanguard is keenly focused on helping Australian investors achieve better investment outcomes by helping to lower the cost of active investing, having successfully lowered the cost of investing for clients across the globe within both index and active markets.

Building upon an existing line-up of 22 ETFs, including four diversified ETFs launched in 2017, Vanguard continues to offer Australian investors more choice and diversity within its ETF offering.

Vanguard in Australia now manages more than $140 billion of assets for investors across index and active managed funds, exchange traded funds and separately managed accounts. Vanguard will continue to expand its product offering throughout 2018.

Fund NameFund ObjectiveASX CodeManaged Expense Ratio
Vanguard Global Value Equity Active ETF (Managed Fund) The Fund seeks to provide long term capital appreciation through an active approach that invests in global equity securities demonstrating value characteristics. VVLU 0.28% p.a.
Vanguard Global Minimum Volatility Active ETF (Managed Fund) The Fund seeks to provide long-term capital appreciation with volatility lower than the FTSE Global All-Cap Index (AUD hedged), before taking into account fees, expenses and tax. VMIN 0.28% p.a.