Vanguard continues its push into the active ETF market with the introduction of three news funds focused on equities. These are the Vanguard Wellington U.S. Value Active ETF (VUSV), Vanguard Wellington U.S. Growth Active ETF (VUSG), and Vanguard Wellington Dividend Growth Active ETF (VDIG). This bolsters the current active equity roster to now eight funds for the issuer. This proves it can pivot from offering low-cost, indexed funds to meet the demands of a current ETF marketplace that’s seen a record number of active launches this year.
“Vanguard has long been known as a leading provider of index-based ETFs, but has built out a strong lineup of active ETFs in the last two few years,” said TMX VettaFi’s Head of Research Todd Rosenbluth.
Vanguard’s Active Fixed Income Roster Growing Too
Vanguard has also been adding to its active fixed income roster this year. It launched the Vanguard Short Duration Bond ETF (VSDB), Vanguard Multi-Sector Income Bond ETF (VGMS), Vanguard Government Securities Active ETF (VGVT), and Vanguard High-Yield Active ETF (VGHY). This brings its current count to nine active fixed income funds.
All three of the new equity funds will be advised by Wellington Management, which has a well-documented history with Vanguard. The firm was founded in 1928 and, in 1951, hired John Bogle, who would then go on to establish the Vanguard Group in 1975.
“While most of the existing active ETFs are bond-based, this new suite of three active equity ETFs, advised by Wellington Management, is a significant addition,” Rosenbluth added.
Deep Management Expertise
In a press release, Vanguard noted these active funds are “built on proven strategies, managed by experienced investors.” This is where the active management strategy comes to the fore. It allows portfolio managers to adjust the holdings of a fund to suit current market conditions. This means an active fund can be optimized to capture upside while also protecting the downside when warranted.
Furthermore, Vanguard already brings 50 years of active management expertise, namely with mutual funds. As noted, the partnership with Wellington spans for decades. The partnership continues in these new active funds that contain the inherent benefits of ETFs as an investment vehicle.
“We are proud to collaborate with Wellington Management to bring fundamental active equity expertise to a broader audience through the new suite of ETFs,” said Dan Reyes, global head of investment product at Vanguard. “Each strategy is designed to deliver long-term value, leveraging deep research and disciplined portfolio management. We believe that the transparency, tax efficiency, and accessibility of the ETF structure, combined with Wellington’s proven investment approach—will empower investors to build resilient, diversified portfolios for the long term.”
Complementary Components
Vanguard noted that these new active funds can work in tandem with one another to create a diversified portfolio. Therein lies the advantage of ETFs, allowing investors to mix and match their exposures to various funds with differing investment styles to create a complete portfolio.
All three funds build off current mutual funds already managed by Wellington. So the familiarity of its portfolio managers with their respective equity markets should make for a seamless transition.
New funds’ Focuses
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Vanguard Wellington U.S. Value Active ETF (VUSV): Strategy and management are similar to Wellington’s portion of the Windsor Fund (VWNEX), which uses an opportunistic strategy that invests in a range of 60-100 stocks. As the fund name explicitly says, the focus is on value and finding companies with depressed valuations due to a shift in market sentiment. The fund is benchmarked to the Russell 1000 Value Index. It has an expense ratio of 0.30%.
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Vanguard Wellington U.S. Growth Active ETF (VUSG): Strategy and management are similar to Wellington’s portion of the Vanguard Global Equity Fund (VHGEX), which uses a concentrated strategy with 30-60 stocks. The prime focus is on disruptive, innovative U.S. companies with high earnings and revenue growth spanning various sectors. The fund is benchmarked to the Russell 1000 Growth Index. It carries an expense ratio of 0.35%.
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Vanguard Wellington Dividend Growth Active ETF (VDIG): Managed by the same team responsible for the Vanguard Dividend Growth Fund (VDIGX). VDIG uses a concentrated equity strategy comprising 20-40 stocks. The fund uses a defensive approach derived from a focus on high-quality companies committed to maximizing shareholder return, exhibiting strong balance sheets, and a propensity to pay and grow their dividends over time. VDIG is benchmarked to the S&P U.S. Dividend Growers Index. It has an expense ratio of 0.40%.
Originally published on ETF Trends
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