Vanguard has expanded its low-cost offering with the launch of its first active ETFs on the London Stock Exchange. The new ETFs will be managed by Vanguard’s experienced Quantitative Equity Group (QEG).
John James, Managing Director for Vanguard in Europe, says: “Today’s launch reinforces Vanguard’s commitment to offering UK investors high-value, low-cost active and index funds. Vanguard has successfully managed active funds in the US for more than forty years and we have nearly USD1 trillion in active assets under management. Since entering the UK market over six years ago, we have focused on giving investors a better chance of investment success. This launch demonstrates our belief in low-cost, broadly diversified active managed strategies to help achieve that.”
There is a significant amount of empirical research that has found exposure to factors, such as value, momentum, liquidity and volatility, could offer investors attractive premiums over the long term. There may also be periods of underperformance that investors should expect when taking active risk.
The Vanguard Global Value Factor UCITS ETF aims to capture the potential premiums of low-valued stocks, which are stocks that look inexpensive compared with the company’s fundamentals.
The Vanguard Global Momentum Factor UCITS ETF aims to capture the momentum premium through focusing on stocks with strong recent share price performance, typically over the previous twelve months.
The Vanguard Global Liquidity Factor UCITS ETF aims to capture the liquidity premium by investing in stocks that are less frequently traded and could be a source of outperformance over the long-term.
The Vanguard Global Minimum Volatility UCITS ETF helps investors reduce risk in their portfolios. Investing in a portfolio that targets a combination of stocks with lower volatility compared with the broader market allows investors to maintain exposure to equities with the potential for improving risk-adjusted returns.
Axel Lomholt, Head of Product for Vanguard’s International business, says: “We believe these ETFs offer a compelling alternative to high-cost active strategies that target similar exposures. Vanguard has chosen to take an active approach to managing these funds by using quantitative models to select stocks and build a portfolio that targets the desired factor whereas other managers may track an index to implement a factor-based strategy. Investors need to be confident that the methodology chosen will deliver their desired factor exposure to meet long-term investment objectives.”
