Vanguard terminates Global Quantitive Equity Fund (What’s next?)

https://api.vanguard.com/rs/gre/gls/1.3.0/documents/21988/au

This fund ($28 mil) actually has greater FUM than the combined “Vanguard Global Value Equity Active” Wholesale Fund and ETF VVLU.

Not a good sign for niche ETFs that struggle for FUM even from the likes of Vanguard. Contrary to discussions I had with Vanguard awhile back.

Seems like the rule of thumb of avoiding niche funds / ETFs with less than $200 Mil might have some merit.

 

With no ETF there’s less effected numbers wise.

Their “Value” product also has a wholesale unlisted Fund in addition to the ETF. The ETF I assume like most other Vanguard ETFs is simply another unit class of the underlying wholesale fund. Only around $23 mil in total:





Still niche products either way. ETFs are regularly being shut down if FUM continue to be low for a time.

 

There does appear to be some change in these areas. I understand the Vanguard Fixed Interest funds are no longer fixed but now include floating bank bills. Amend the title of the funds and all shall become clear.

 

Easy change to Vanguard “Unfixed Interest” Fund. That’s get the punters in.

 

I wonder how this looks for the Managed Payout Fund.

It was incepted in 2015 but only has $24.7m in AUM which seems low for a wholesale only fund.

It makes me nervous about investing in it which is a shame as I'm attracted to the the idea of the fund..

 

When talking to Vanguard awhile back it was mentioned as having been looked at after a major investor left the fund. Supposeably they are trying to maintain their commitment to it but I wouldn’t be willing to gamble on that after this latest event.

 

Thanks - that's pretty much my current feelings too.

I just like the payout structure of it (4% draw from average 3 years assets) as it seemed to be a way (well almost anyway) to implement a SWR style withdrawal on automatic pilot. I'm not as convinced about all the active funds it holds though.

Really what I want is something like their diversified ETFs in terms of asset allocation but set so the distribution works more like the payout fund.....why can't they make this just for me....

 

I avoid "cute" now. Placed funds with well respected manager who branched out on his own and it didn't work out. No great damage to me but now stick to tried and true. The principle could well apply in this case but as always it's up to the investor to take a chance according to their assessment.

 

Have you ever been invested in unlisted funds back in the day with dca every quarter or month set and forget @SatayKing ?? Or have you always preferred the "income way" and abit of DIY in regards to when and where you allocated your funds???!!

 

A couple but not DCA. Only one I actually remember was an international one, Hunter Hall I think. I redeemed the lot in March 1987. Only reason I remember that one is the mob rang me asking if I wanted to change my mind. No I didn't.

As we all know what happened in October 1987 I expect kudos on my excellent timing of the market. None forthcoming? You mean lot

 

Given the VVLU model is already built and implemented what would be the ongoing costs of running the fund? Assuming the buying and selling is automated the $23M x MER of 0.28% ~ $64k might cover part of an analyst's salary to do reporting, which I would have assumed was also mostly automated.

Assuming it could break even on an ETF such as CCLU, Vanguard may then drop such a fund only if it consistently underperforrms. Therein lies the problem, this fund by definition may take a long time to achieve outperformance.

 

If that’s the case one would hope Value comes back into vogue sooner rather than later.

I know @dunno invests in VVLU through his SMSF from memory. In a low / no tax environment a fund closure is generally not as much of a big deal as CGT is of minimal concern (assuming there is CGT). However unexpected CGT events in higher tax circumstances are certainly unwelcome. Hence in @dunno ‘s case I doubt he loses sleep over such things. @dunno you awake?

 

Barely


I note that the quantitive global fund was a sort of old school multifactor fund in its nature. Vanguard have recently added a multifactor ETF under their new active umbrella. Seems more like some rationalisation to me of something that doesn’t fit the old passive model or the new active model rather than just a lack of FUM decision.

Whilst I acknowledge the precedent of Vangaurd closing a fund, I don’t see it as changing the probability of VVLU being closed a great deal. But closure of VVLU will remain a risk until it comes into favour and gets some FUM behind it. It’s a known risk, and a limited impact risk that I can live with.

In relation to the "what's next" part of the thread title.
I rate closure of STW being a generic product as a higher risk, if they don't start to react to pricing preasure soon.The bleeding has started. It's no niche play Etf, but the risk is still there. Plenty of ETF's and LIC'S at risk over time as the market plays the game of creative destruction.