Vanguard will list its first active exchange-traded funds for Australian investors on the ASX tomorrow.
The first of the two new ETFs is Global Value Equity (ASX: VVLU), and invests in global equities with value characteristics. The second, the Global Minimum Volatility (ASX: VMIN), aims to deliver a return with lower volatility than the FTSE Global All-Cap Index (AUD hedged) before fees, expenses and tax.
Both will be managed by Vanguard's quantitative equity group (QEG) and target specific risk and return objectives via factor exposures, and are offered at a management expense ratio of 0.28%.
"Offering active management at a lower cost removes one of the most persistent barriers to active outperformance," Vanguard Asia-Pacific head of investments Daniel Reyes said.
"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," Reyes said.
QEG Australian head Michael Roach added: "Factors are the DNA of an investment portfolio; the underlying characteristics that drive investment performance.
"Vanguard is taking a different approach to other factor fund offerings in the market - we are actively managing these portfolios, weighting shares according to their exposure to each factor whilst maintaining a broadly diversified investment portfolio."
Vanguard recently noted that ETFs maintained liquidity and picked up trading volume even as Australian shares plunged in February.
In the week ending February 9, ETF trading volumes tripled normal activity on Australian primary market creations and doubled on secondary markets.
Aussie ETFs also maintained liquidity during the price correction, the $6.3 trillion investment manager said.
The average spread for Vanguard's Australian ETFs widened `marginally' from 13.2 to 17.2 basis points - a number Vanguard said attests to the liquidity of ETFs.
"The bottom line is that broad-based, well-diversified ETFs passed the recent liquidity test during a time of market stress," Vanguard head of market strategy and communications Robin Bowerman said.
UK and Hong Kong showed a similar pattern. In the US, 97% of households did not cash out their investments or change asset allocation in the February price correction.