Vanguard plans to launch its first active stock-picking ETFs

Globe and Mail

2 days ago

Passive-investment management leader Vanguard plans to launch its first actively managed U.S. stock exchange-traded funds this year, according to filings with regulators on Monday.
The company, which pioneered low-cost, no-frills index-based investment products, intends to roll out ETF versions of three of its existing mutual funds. The funds will be managed by Wellington Management, according to the filings.
While Vanguard has rolled out a handful of active bond ETFs, the new products mark its first push into stock-picking ETFs. They will target dividend growth, growth stock and value stock investment strategies, Vanguard said.
There has been a torrent of new ETFs this year from asset managers trying to capture growing demand for actively managed ETFs that aim to outperform indexes. Actively managed ETFs arose around six years ago. The advent of this strategy in a more tax efficient and lower-cost ETF wrapper has attracted growing investor interest.
Morningstar Direct calculates that there have been 630 new exchange-traded products so far this year, compared to 381 for the same period in 2024. Some 86 per cent of those launches were of actively managed strategies, according to a report published this month by JP Morgan Asset Management, which also found that active ETFs now account for some 37 per cent of total U.S. ETF inflows.
'Until now, Vanguard had been sitting out this rush,' said Jeff DeMaso, editor at the Independent Vanguard Advisor.
DeMaso said he expects the new funds will attract a steady if not spectacular flow of assets.
'These are proven strategies,' he added.
The new ETFs are 'building blocks that reflect our ... commitment to disciplined product development and investor outcomes,' said Ryan Barksdale, head of active equity product at Vanguard, in a statement.