Vanguard Plans Its First U.S. ETF Liquidation

By Janet Levaux

News September 26, 2022 at 10:40 AM

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Vanguard plans to liquidate its $44 million Vanguard U.S. Liquidity Factor ETF in late November, citing its lack of popularity with investors — its first closure of a U.S. exchange traded fund.

"Despite the ETF's capable advisor and sound approach to factor investing, it has not gained scale since its 2018 debut," said Dan Reyes, head of the Vanguard Portfolio Review Department, in a statement.

Overall, though, Vanguard says it "continues to believe in the long-term investment case for factor investing." Its other U.S. factor funds have a combined $3.4 billion in assets and are actively managed by the Vanguard Quantitative Equity Group. The five factors they target are value, momentum, quality, liquidity and minimum volatility.

The Vanguard U.S. Liquidity Factor ETF's expense ratio is 0.13%. It is down 22.56% this year, according to Morningstar.

The ETF, which trades under the ticker VFLQ, was an "odd fit" from the start, VettaFi's Dave Nadig told Bloomberg in an interview. "It's not super surprising that they'd close the laggards down," he added. "As for why now? Nobody cares when you close products in a bear market."

chart showing VFLQ struggled to gain assets since 2018 launch

Investors with shares of the ETF "are being notified and have the opportunity to sell their shares prior to the ETF delisting from Cboe BZX Exchange, Inc. at the close of business on or about Nov. 22," according to Vanguard. "On the liquidation date, the remaining ETF assets will be sold, and the proceeds distributed."

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