[ETF.com] Vanguard Active [Factor] ETFs Slow To Grow

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lack_ey
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Joined: Wed Nov 19, 2014 11:55 pm

[ETF.com] Vanguard Active [Factor] ETFs Slow To Grow

Post by lack_ey » Thu Apr 19, 2018 10:13 am

Here's a short article on ETF.com taking note of the fact that Vanguard's factor ETFs are hardly taking off. Vanguard is charging competitive fees relative to index funds in the space, and they have the advantage of more flexibility here in terms of implementation (like DFA or similar), not being tied to an index. They have the same brand name and parent backing as all their other products, many of which are much more popular. And they are run by an established internal group that runs multiple $1 billion+ AUM funds. But not many are biting.

http://www.etf.com/sections/features-an ... -slow-grow
The lineup of Vanguard actively managed factor ETFs is off to a very slow start in the asset-gathering race, at least relative to other Vanguard products.

Two months since inception, four of the six active factor funds have seen zero net asset inflows. Zero...

Only one ETF—the Vanguard U.S. Multifactor ETF (VFMF)—has seen a decent $11 million in net creations since mid-February.
[Elisabeth Kashner of FactSet] adds: “While the active factor ETFs carry out Vanguard's mission of delivering high-quality, low-cost products, they're not really ‘Boglehead’ products—they introduce significant complexity to a portfolio. It’s not at all clear that this complexity will be rewarded over time.”

“The whole point of factor investing has been, up to now, to replicate in passive form the ‘secret sauce’ of many active managers, a la Buffett's alpha,” she noted. “Advisors may well be confused by what seems like backtracking.”
Not really Boglehead products, I see. :twisted:


For reference, iShares Edge MSCI USA Value Factor ETF (VLUE) launched in 2013 has $3.4 billion AUM. Vanguard U.S. Value Factor ETF (VFVA) is still under $8 million.

For multifactor ETFs, Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC) has $3.1 billion, iShares Edge MSCI Multifactor USA ETF (LRGF) has $1.0 billion, and John Hancock Multifactor Large Cap ETF (JHML) that's run by DFA has $0.4 billion, among others. Vanguard U.S. Multifactor ETF (VFMF) has $27 million in the ETF shares.

That said, late comers have had trouble gaining acceptance, not just Vanguard, even when backed by big names. PowerShares Multi-Factor Large Cap Portfolio (GMFL) launched in June 2017 (under the Guggenheim name; Guggenheim's ETF business was bought by PowerShares and most Guggenheim ETFs have subsequently been rebranded) is struggling with $1.4 million. PIMCO RAFI Dynamic Multi-Factor U.S. Equity ETF (MFUS) launched in August 2017 has $70 million.

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