Vanguard to list active factor ETFs

Vanguard will begin trading two new active factor exchange-traded funds (ETF) on the Australian Securities Exchange tomorrow, including one that protects SMSF clients against volatility.

The firm’s new active ETFs are the Global Value Equity and Global Minimum Volatility funds, with the latter particularly suited to SMSFs in the pension phase as a tool to manage volatility risk.

The funds will be managed by Vanguard’s quantitative equity group (QEG), which employs rules-based active management to provide target exposure to factors in these ETFs.

Vanguard Australia QEG head Michael Roach told selfmanagedsuper the products are targeted towards advisers as portfolio construction tools to meet specific objectives of a portfolio.

“[In relation to] minimum volatility specifically, we see some strong applications for those investors maybe more in the pension phase where they’re looking to better manage their market volatility where there’s still a strong desire to have equity exposure,” Roach said.

“Now they can reduce that equity exposure and better weather those volatile markets that we have been experiencing over the past couple of months.”

The funds aim to achieve specific risk and return objectives through factor exposures to global value and global minimum volatility at a management expense ratio of 0.28 per cent.

Vanguard Asia-Pacific head of investments Daniel Reyes said: “Offering active management at a lower cost removes one of the most persistent barriers to active outperformance.

“This expansion of our ETF range offers more tools to help investors build well-diversified portfolios – across and within asset classes and investment styles, and according to their appetite for risk.”

Vanguard Australia manages more than $140 billion of assets across index and active managed funds, ETFs and separately managed accounts.

It has an existing product range of 22 ETFs, including four diversified ETFs launched in 2017.

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