Vanguard's deceased founder Jack Bogle routinely slammed other firms for offering more expensive actively managed funds. Now his firm is doing just that.
Vanguard announced in mid-August plans to launch three new ETFs. That's not unusual, Vanguard is already one of the largest providers of ETFs. But what is somewhat unusual is that these new ETFs will use human stock pickers using fundamental analysis and charge much higher fees than on its index-based passive funds.
The investment manager says the new ETFs are part of the firm's ongoing stance of offering active funds to investors who want them. "These ETFs are not just new products — they're thoughtfully designed building blocks that reflect our long-standing commitment to disciplined product development and investor outcomes," said Ryan Barksdale, head of active equity product at Vanguard.
But will Vanguard investors pay up for them?
The New Vanguard ETFs
The three new proposed ETFs are slated for a potential launch before year end. They are Vanguard Wellington Dividend Growth Active ETF, Vanguard Wellington U.S. Growth Active ETF and Vanguard Wellington U.S. Value Active ETF.
VDIG's manager will choose 25 large-cap stocks likely to boost their dividend. VUSG will carve out and only invest in U.S. stocks in the Vanguard Global Equity Fund (VHGEX) with high growth prospects. And VUSV will pick roughly 80 positions seen as undervalued.
Todd Rosenbluth of Vetta Fi says the active ETFs might interest investors looking for more selectivity. VDIG's roughly 25 positions seriously narrows the focus versus the passive counterpart, Vanguard Dividend Appreciation Index "that holds over 300 stocks," he said. The new ETF is "offering potential benefits from a stronger focus on valuation."
But the fees are higher, too. VDIG plans to charge 0.4%, VUSG will carry a 0.35% fee and VUSV asks 0.3%. Index-based VIG charges just 0.05%. VDIG will be Vanguard's most expensive ETF.
"These new active ETFs will be priced higher than Vanguard's index-based products, (but) they are expected to be competitively priced compared to other active offerings on the market," Rosenbluth said.
Rise Of Active ETFs?
Money has poured into passive ETFs for years. But some ETF providers still think there's room for active funds.
"Actively managed ETFs are definitely gaining traction," Rosenbluth said. "Through July 2025, active ETFs have captured 37% of net inflows for the ETF industry despite representing only about 10% of total assets."
Some investors hope active management can smooth out some volatility. "Advisors and investors are increasingly looking to active management to navigate an uncertain equity market," Rosenbluth said. Many large ETF firms like Fidelity and iShares offer active ETFs, too.
And to be fair, Vanguard already offers 13 active ETFs — although none of them are as large of the firm's popular passive funds and most are bond funds. The largest active ETF at Vanguard is the $5.5 billion-in-assets Vanguard Ultra-Short Bond ETF. It charges 0.1% annually.
In the stock area, the largest active ETF is the $1.1 billion in assets Vanguard U.S. Momentum Factor ETF. The advisor uses a model to pinpoint stocks with the strongest recent performance. It charges 0.13% annually. In comparison, the passive Vanguard S&P 500 ETF has $1.3 trillion in assets and charges just 0.03%.
"Investors will need to assess whether the added value of active management justifies the fee," Rosenbluth said.
Vanguard's Active ETF Lineup
The firm looks to add to its family of 13 active ETFs
| ETF | Symbol | Fee | Assets, $ millions |
|---|---|---|---|
| Vanguard Ultra-Short Bond | VUSB | 0.10% | $5,500 |
| Vanguard Core Bond Fund | VCRB | 0.10% | $3,700 |
| Vanguard U.S. Momentum Factor | VFMO | 0.13% | $1,100 |
| Core Plus Bond Fund | VPLS | 0.20% | $693 |
| Vanguard U.S. Value Factor | VFVA | 0.13% | $682 |
| Vanguard U.S. Quality Factor | VFQY | 0.13% | $415 |
| Vanguard Core Tax-Exempt Bond | VCRM | 0.12% | $410 |
| Vanguard U.S. Multifactor | VFMF | 0.18% | $367 |
| Vanguard U.S. Minimum Volatility | VFMV | 0.13% | $295 |
| Vanguard Short Duration Tax-Exempt Bond | VSDM | 0.12% | $190 |
| Multi-Sector Income Bond Fund | VGMS | 0.30% | $88 |
| Vanguard Short Duration Bond | VSDB | 0.15% | $68 |
| Vanguard Government Securities Active | VGVT | 0.10% | $15 |
Sources: IBD, S&P Global Market Intelligence
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