Vanguard, the world’s second-largest asset manager and a pioneer of low-cost index investing, is preparing to enter the United States market with actively managed exchange-traded funds (ETFs) for the first time.
According to regulatory filings on Monday, the company plans to launch ETF versions of three existing mutual funds, each pursuing a distinct strategy focused on dividend growth, growth stocks and value stocks.
Wellington Management will oversee the active management of the funds, marking a shift in Vanguard’s approach to exchange-traded products.
Vanguard already offers a small suite of actively managed bond ETFs, but the latest filings represent its first foray into active equity ETFs.
The move comes amid a wave of launches from asset managers seeking to capture rising investor demand for active ETFs that promise the potential to outperform benchmarks while still offering tax efficiency and lower costs compared to traditional mutual funds.
The three ETFs will not be entirely new creations but will build on established strategies and experienced managers. The Vanguard Wellington Dividend Growth Active ETF (VDIG) will be overseen by Peter Fisher, who currently manages the Vanguard Dividend Growth Fund and Vanguard Advice Select Dividend Growth Fund (VADGX).
The Vanguard Wellington U.S. Growth Active ETF (VUSG) will be led by Michael Masdea and Brian Barbetta, adapting their approach from Vanguard Global Equity Fund (VHGEX) but restricting holdings to U.S. stocks.
Meanwhile, David Palmer will manage the Vanguard Wellington U.S. Value Active ETF (VUSV), drawing on his experience from Vanguard Windsor Fund (VWNDX).
In line with Vanguard’s reputation for low-cost investing, the expense ratios of the new funds are expected to rank among the lowest in their respective categories. VUSG and VUSV are projected to fall within the bottom decile of costs for large-growth and large-value ETFs, while VDIG’s fees will be just outside the cheapest quartile of large-blend strategies.
The surge underscores a growing appetite among investors for strategies that combine the accessibility and cost advantages of ETFs with the potential alpha generation of active management. Vanguard’s entry into the segment is expected to add further momentum to the trend, while testing the waters for a company long associated with its commitment to passive, index-based investing.
