About our factor ETFs
Vanguard may be best known for indexing, but we've managed active investments since our founding in 1975. Today we're one of the world's largest active managers, with $1.8 trillion USD in actively managed funds.1
Active investing at Vanguard
Investors look to Vanguard for active management because they know what to expect from us: a disciplined, low-cost approach that aims to give them the best chance for success. Ultimately though, results are what matter. Our active investments in the United States have delivered strong performance, and investors have noticed.
In Canada, investors can access Vanguard active management through various products including our mutual funds and our global factor ETFs.
What sets Vanguard factor ETFs apart?
ETFs are often associated with index investing, but they can also be actively managed. Vanguard factor ETFs use an active quantitative approach, with each ETF aiming to maintain consistent exposure to a specific factor. The factors we target have historically outperformed the global equity market on either an absolute or risk-adjusted basis.
Active management
Factor investing is inherently active because it involves making a decision to tilt a portfolio away from market-cap weightings. Even so, many investments that target factors do so by passively tracking an index. Our portfolio managers aren't tied to an index. They have the flexibility to add or reduce positions as needed to maintain continual, dynamic exposure to the desired factors, even as markets and stocks change through time.
Low costs
Our factor ETFs have annual management expense ratios (MERs) of ~0.37%.2 This compares favourably with the industry average MER of 0.96% for actively managed mutual funds3 and 0.67% for actively managed ETFs.4
Global diversification
Our ETFs invest globally because the factors we target have been shown to work globally. A global equity portfolio also helps diversify risk while increasing investment capacity and liquidity.
VVO | Vanguard Global Minimum Volatility ETF
The ETF invests in stocks from developed and emerging markets that display a combination of factors that can result in lower portfolio volatility.
Investors committed to an equity allocation in pursuit of their long-term investment objectives can find near-term volatility unsettling. Minimum volatility investing attempts to capture a significant share of stock market performance, while avoiding the sharpest market highs and lows. This allows investors to maintain exposure to equities with the potential for improving risk-adjusted returns.
Management fee**
0.35%
Risk indicator
5 out of 7
Net assets*
$41 M
VVL | Vanguard Global Value Factor ETF
The ETF invests in stocks from developed markets that display the strongest value factor characteristics.
Historically, a portfolio of stocks with low share prices relative to each company’s fundamental value has outperformed relative to the broad equity market. This return premium can be explained in part by some behavioural biases, such as investors’ tendency to shun companies that may be struggling in the short term, while overpaying for companies that exhibit recent growth.
Management fee**
0.35%
Risk indicator
5 out of 7
Net assets*
$292 M
VMO | Vanguard Global Momentum Factor ETF
The ETF invests in stocks from developed markets that display the strongest momentum factor characteristics.
Studies have shown that stocks with strong recent performance have tended to outperform over subsequent short-term periods. This phenomenon, called the momentum factor, may exist because of certain investor behavioural biases, such as the tendency to overreact or underreact to new information and base decisions on recent market activity.
Management fee**
0.35%
Risk indicator
5 out of 7
Net assets*
$55 M
* Data as of January 31, 2022.
1 Source: Vanguard. Assets as of December 31, 2021.
2 The management expense ratio (MER) is the MER as of March 31, 2021, including waivers and absorptions and is expressed as an annualized percentage of the daily average net asset value. The MER without any absorptions or waivers would have been 0.37% for VVO, 0.38% for VVL, and 0.38% for VMO. Vanguard Investments Canada Inc. expects to continue absorbing or waiving certain fees indefinitely but may, in its discretion, discontinue this practice at any time.
3 The MERs provided are asset-weighted averages, as of December 31, 2020. The average MER for industry mutual funds was provided by Morningstar and includes Series F mutual funds only and excludes ETFs, money market funds, funds with management fees charged at account level, and index funds.
4 The MERs provided are asset-weighted averages, as of December 31, 2020. The average MER for industry ETFs was provided by Morningstar and Vanguard and excludes funds with performance fees, funds with management fees charged at account level, index funds, money market and asset allocation.
** The management fee is equal to the fee paid by the fund to Vanguard Investments Canada Inc. to manage the fund and does not include applicable taxes or other fees and expenses of the fund.