Vanguard Group has filed plans with the Securities and Exchange Commission for its priciest exchange-traded funds yet as the asset management giant seeks to beef up its actively managed lineup.
The Vanguard Wellington Dividend Growth Active ETF (ticker VDIG), the Vanguard Wellington US Growth Active ETF (VUSG), and the Vanguard Wellington US Value Active ETF (VUSV) will carry expense ratios of 0.40%, 0.35% and 0.30%, respectively, according to Vanguard spokesperson. Currently, multi-sector bond fund VGMS ranks as Vanguard’s costliest ETF with a 0.30% fee.
Jack Bogle-founded Vanguard — famed for its low-cost, index-tracking funds — has been mounting an offensive into the growing universe of actively managed ETFs. Investor demand has pushed assets in active ETFs to about 10% of the overall $12 trillion industry, compared to less than 5% a decade ago, Bloomberg Intelligence data show. While Vanguard currently manages rules-based active equity ETFs, the trio of funds would mark the firm’s first fundamental, stockpicking strategies to launch in the wrapper.
“By combining Wellington’s active management expertise with the structural benefits of ETFs, we’re aiming to deliver low-cost, active, transparent, and tax-efficient solutions for today’s investors,” Ryan Barksdale, Vanguard’s head of active equity product, said in a statement.
VDIG, VUSG and VUSV’s debut would bring Vanguard’s total ETF lineup to 100 funds, 17 of which would be actively managed. While the new funds would bump up Vanguard’s average expense ratio, all three are still well below the average fee of 0.76% for US-listed active equity ETFs, Bloomberg data show.
VDIG will focus on large-cap, dividend-growing stocks in a low-turnover portfolio of about 25 holdings, according to Monday’s filing. VUSG will target around 40 companies with high-growth characteristics, while VUSV will invest in approximately 80 value-oriented companies, filings show.
All three ETFs would be advised by Wellington Management Company, Vanguard’s long-time partner. While Vanguard and Wellington have partnered on multiple mutual funds and interval funds, Monday’s filing represents the pair’s first joint-venture in the ETF structure.
“We are excited to build upon our longstanding partnership with Vanguard, bringing a series of proven, fundamental active equity approaches to individual investors in the ETF wrapper,” Kim Gailun, head of equity boutiques at Wellington, said in Monday’s statement.
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