Almost nine months after it filed updated registration documents with the Securities and Exchange Commission, Vanguard has launched its first factor ETFs in the U.S. along with one factor-based mutual fund.
They are "aimed primarily at financial advisors and institutional investors" whom Vanguard believes "understand the risks of potential underperformance and can effectively incorporate factor funds into their portfolios," according to a statement from CEO Tim Buckley.
Altogether Vanguard launched seven funds — five single-factor ETFs, each with a 13 basis-point expense ratio, and one multifactor ETF and one multifactor fund, charging 18 basis points each.
The single-factor ETFs are focused on value, quality, momentum, liquidity and minimum volatility. All the funds are managed by Vanguard's Quantitative Equity Group, its internal active equity manager that oversees more than $39 billion in assets.
Vanguard considers the new funds part of its actively managed fund offerings but ones with a "differentiated approach — disciplined, rules-based [with] targeted exposures to factors — along with Vanguard's low costs," according to Buckley's statement.
Ben Johnson, director of global ETF research at Morningstar, says the funds are "nominally active," using a "rules-based, quantitatively driven strategy," not one where portfolio managers are focused on qualitative analysis of individual companies and their stocks.
