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. They are the Vanguard U.S. Liquidity Factor ETF (VFLQ), the Vanguard U.S. Minimum Volatility ETF (VFMV), the Vanguard U.S. Quality Factor ETF (VFQY) and the Vanguard U.S. Value Factor ETF (VFVA).
One of the funds — the Vanguard U.S. Momentum Factor ETF (VFMO) — has attracted less than $2 million in net assets, probably benefiting from the fact that momentum is doing well this year. Only one ETF — the Vanguard U.S. Multifactor ETF (VFMF) — has seen a decent $11 million in net creations since mid-February.
According to Vanguard's head of quantitative equity product management Matt Jiannino, the main reason that uptake of these strategies has been slow is due to the fact that getting advisors onboard with a new fund — and a new active manager — takes time. The Vanguard brand name is strong, but the company has to spend time and effort on advisor education.
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Just as important is establishing a live performance track record, particularly in the active space, Jiannino says. Due diligence desks require sometimes as much as three years of track record for actively managed ETFs before they consider adopting them.