Vanguard Breaks New Ground wiht Launch of First Actively Managed equity ETFs
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Meta Description: Vanguard, the index fund giant, has launched its first actively managed equity ETFs, signaling a major shift in strategy and tapping into the booming active ETF market.
Vanguard, long synonymous with low-cost passive investing, this week marked a notable milestone by officially launching its first actively managed equity exchange-traded funds (ETFs). This move represents a departure from its traditional focus and a strategic response to the evolving investment landscape.
With over $8 trillion in assets under management – as a leader in indexing and low-fee investing. While currently the second-largest ETF provider globally, trailing only one unnamed competitor, Vanguard is experiencing the fastest growth among large managers, attracting more investor capital in recent years.Therefore, the announcement earlier this year of a foray into active stock ETFs was widely anticipated and considered a pivotal moment for the company.
It’s important to note that Vanguard already offers actively managed bond ETFs and factor-based active etfs utilizing quantitative screens. Though, the three new ETFs represent the firm’s first basic stock ETFs, managed entirely by stock-picking professionals. As of this week,these offerings are available to investors.
Introducing Vanguard’s New Active ETFs
The new Vanguard active ETFs are managed by Wellington Management, a seasoned advisor already responsible for managing numerous Vanguard active mutual funds. The three new ETFs are:
- Vanguard Wellington U.S. Value Active ETF (VUSV): Designed to mirror the strategy of a $24 billion fund, VUSV focuses on 60 to 100 stocks possibly undervalued due to market sentiment shifts. Its benchmark is the Russell 1000 Value Index, and it carries an expense ratio of 0.30%.
- Vanguard Wellington U.S. Growth Active ETF (VUSG): Similar to the $8 billion Vanguard Global Equity mutual fund (VHGEX),also managed by Wellington,VUSG is a concentrated strategy investing in 30 to 60 disruptive companies exhibiting high earnings and revenue growth. Its benchmark is the MSCI USA Growth Index, with an expense ratio of 0.35%.
- Vanguard Wellington Dividend Growth active ETF (VDIG): Managed by the same team behind a $44 billion fund, VDIG concentrates on 20 to 40 high-quality companies with strong balance sheets and consistent dividend growth. Its benchmark is the S&P U.S. Dividend Growers Index, and it has an expense ratio of 0.40%.
“Each strategy is designed to deliver long-term value,leveraging deep research and disciplined portfolio management,” stated Dan Reyes,global head of investment product at Vanguard. “We believe that the openness, tax efficiency, and accessibility of the ETF structure, combined with Wellington’s proven investment approach-will empower investors to build resilient, diversified portfolios for the long term.”
According to Kim Gailun, head of equity boutiques at Wellington Management, “These new ETFs offer investors access to proven managers and fundamental active equity exposure in an ETF wrapper-an extension of the long-term success Wellington Management has had as an advisor on many of Vanguard’s active equity mutual funds.”
The Rise of the Active ETF
Historically, index funds have outperformed actively managed funds over the long term. Though,2025 is proving to be a watershed year for active ETFs.
An analysis by American Century Investments reveals that approximately 86% of all new ETF launches in 2025 have been active ETFs. Remarkably, there are now more active ETFs available than passive ETFs, despite active ETFs only becoming widely accessible following an SEC ruling in 2019.
Moreover, active ETFs have already achieved a record for net inflows, reaching roughly $378 billion as of October 31, according to American Century. One key driver behind this surge in interest is likely the increased market volatility and ongoing economic uncertainty, leading investors to seek experienced management during turbulent times.
This strategic shift by Vanguard, combined with the broader industry trend, signals a potentially lasting change in the ETF landscape, offering investors a wider range of choices and strategies to navigate the complexities of the market.
