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Vanguard to offer its first active ETF lineup in U.S.
November 28, 2017 / 5:16 PM / 19 days ago

Vanguard to offer its first active ETF lineup in U.S.

BOSTON, Nov 28 (Reuters) - Vanguard Group Inc on Tuesday said it will offer six actively managed exchange traded funds aimed at giving investors exposure to specific factors like low volatility or liquidity, increasing competition in the nascent investment product area.

The new funds mark the first active ETFs that the Pennsylvania-based fund giant will sell in the United States. Vanguard also said in a statement that one of the funds, as well as a new mutual fund, will use more than one factor in selecting stocks.

Vanguard is best known for its passive products, whose low costs have helped drive its total assets to $4.8 trillion, the most of any mutual fund firm.

Unlike traditional ETFs, which often track a particular index, holdings in actively managed ETFs can deviate from their benchmarks based on managers’ judgments.

Most active ETF assets are currently in fixed-income products such as Pimco Active Bond ETF and the SPDR DoubleLine Total Return Tactical ETF, said Todd Rosenbluth, a director at fund researcher CFRA.

But Vanguard’s new active ETFs could boost demand on the equity side, he said, along with similar products from rivals. Just last week, for instance, BlackRock Inc filed plans for a set of ETFs that would let a computer program choose and classify stocks.

The Securities and Exchange Commission said in September it planned to approve Vanguard’s application to sell active ETFs.

Vanguard said the new funds will be advised by its Quantitative Equity Group, which currently oversees nearly $35 billion, including active ETFs in Canada and the United Kingdom.

Vanguard cautioned that returns on its so-called “factor” funds could be cyclical and said the products are aimed at financial advisers and institutional investors.

Reporting by Ross Kerber in Boston; Editing by Dan Grebler

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