Vanguard’s U.K. outpost is closing its four global factor ETFs in February, according to the firm’s U.K. website. As you may recall, factor funds rely on factors like sales growth, dividend payouts, lower valuations or price momentum, instead of selecting stocks based on company size (large-cap/small-cap) or sector (health care, technology). Each factor is used to screen a universe of stocks based on the defined criteria.
We’ve been keeping an eye on the factor fad for severalyearsnow, and frankly, we haven’t been impressed. Many factor funds have higher expense ratios than their vanilla index counterparts, but that higher price often isn’t justified by better performance.
In this case, it seems probable that underperformance along with a simple lack of assets is the main reason for the closure. As the table below shows, the four ETFs have garnered just $299.5 million in assets through the end of October, nearly five years after their launch.
To be clear, there are differences between Vanguard’s U.S. and international factor funds. The U.S. funds are newer, for instance, and the universe from which they select equities differs—U.S. factor ETFs select from the Russell 3000, while the global ETFs pick from the broader FTSE Developed All Cap Index of more than 5,600 U.S. and foreign stocks. But they have at least one thing in common: Performance has been uninspiring on both sides of the pond. We wouldn’t be surprised to see similar closures in the future among the U.S. factor ETFs.
Vanguard Announces ETF Distributions
Speaking of Vanguard ETFs, the Malvern, P.A. fund giant has updated its list of year-end ETF distributions. (Fidelity has yet to announce the distribution dates for their ETFs, but we’ll keep you posted when they do.)
As we covered last month, keeping an eye on distribution dates (and making sure not to trade near them) is essential for managing your capital gains taxes. You need to know two key dates: The fund’s “record date” and its “ex-dividend date.” Own the fund on the record date and you’ll be eligible to receive a distribution for that year’s gains—even if you just purchased your shares. To make sure you won’t face a costly tax bill, be certain to make any share purchases after the ex-dividend date, when the distributions for the fund have already been paid out and the share price adjusted. (ETFs’ record dates are generally the day after their ex-dividend date; due to the time it takes to settle trades, you won’t be the shareholder of record so long as you purchase after the ex-dividend date.)
Funds that do not appear here are not expected to make any distributions this year, though this information is subject to change, as are the distribution dates themselves.
Record date: 12/18/20 Reinvest/Ex-date: 12/17/20
Communication Services ETF, Consumer Discretionary ETF, Consumer Staples ETF, Energy ETF, Financials ETF, Health Care ETF, Industrials ETF, Information Technology ETF, Materials ETF, Russell 1000 ETFs, Russell 2000 ETFs, Russell 3000 ETF, Utilities ETF.
Record date: 12/21/20 Reinvest/Ex-date: 12/18/20
ESG International Stock ETF, ESG U.S. Stock ETF.
Record date: 12/22/20 Reinvest/Ex-date: 12/21/20
Dividend Appreciation ETF, Developed Markets ETF, Europe ETF, Pacific ETF, Global ex-U.S. Real Estate ETF, High Dividend Yield ETF, International Dividend Appreciation ETF, International High Dividend Yield ETF, Total International Stock ETF, Total World Stock ETF, World ex-U.S. ETF, World ex-U.S. SmallCap ETF.
Emerging Markets Govt. Bond ETF, Extended Duration Treasury ETF, Intermediate-Term Bond ETF, Intermediate-Term Corporate ETF, Intermediate-Term Treasury ETF, Long-Term Bond ETF, Long-Term Corporate ETF, Long-Term Treasury ETF, Mortgage-Backed Securities ETF, Short-Term Bond ETF, Short-Term Corporate ETF, Short-Term Inflation ETF, Short-Term Treasury ETF, Tax-Exempt Bond ETF, Total Bond Market ETF, Total Corporate Bond ETF, Total International Bond ETF, Total World Bond ETF.
Record date: 12/28/20 Reinvest/Ex-date: 12/24/20
Extended Market ETF, Growth ETF, LargeCap ETF, MegaCap ETFs, MidCap ETFs, Real Estate ETF, SmallCap ETFs, Total Stock Market ETF, U.S. Liquidity Factor ETF, U.S. Minimum Volatility ETF, U.S. Momentum Factor ETF, U.S. Multifactor ETF, U.S. Quality Factor ETF, U.S. Value Factor ETF, Value ETF.
Record date: 12/31/20 Reinvest/Ex-date: 12/30/20
ESG U.S. Corporate Bond ETF.
Fidelity to Close and Merge $4B Independence Fund, Two Others
Fidelity plans to merge several of its equity funds including its $4 billion Independence Fund, the firm announced late last month.
The Independence Fund will be folded into the $19.9 billion Magellan Fund, while the $1.1 billion Export and Multinational Fund will reorganize into the $4.9 billion Fidelity Fund and the $63 million Fidelity EMEA Fund will be merged with the $5.8 billion Fidelity Emerging Markets Fund.
Independence, Export and Multinational and EMEA will each close to new investors at the end of the year, with the mergers taking place in May, if approved by shareholders.
Podcast: An Introduction to Tactical Investing
Tactical investment strategies may seem confusing or complex; there are a lot of misconceptions about how they work and how they fit into a long-term investor’s portfolio. We’re here to clear things up.
Join Director of Research Jeff DeMaso and Quantitative Investments Manager Josh Jurbala for the first part of our multi-episode look at tactical investments. They explain the terminology and provide an engaging overview of this ever-evolving investing methodology.
In this insightful conversation, Jeff and Josh discuss:
What do we mean by “tactical,” exactly?
The difference between quantitative and fundamental investment analysis
Who should invest in tactical strategies?
Are these strategies just market timing?
How Adviser Investments’ tactical portfolios operate
…and much more
This disciplined, rules-based investment approach offers a solution for investors seeking to remove the emotional component from decision-making in their portfolios. Tactical isn’t for everyone. Is it for you? Click here to listen now!
Adviser Investments’ Market Takeaways
Between the election, the pandemic and impact of this year’s events on earnings, economic data and interest rates, there’s no shortage of hyperbolic headlines and provocative punditry in the financial media. Not here. In our Today’s Market Takeaways, members of our investment team provide timely videos that clearly and concisely explain what we’re seeing in the markets.
We hope you find them engaging and accessible, and please let us know if there are any topics you’d like to hear us address by sending an email to firstname.lastname@example.org!
About Adviser Investments
Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFs, fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trusts, foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the eighth consecutive year, Adviser Investments was named to Barron’s list of “America’s Best Independent Advisors” and its list of the top advisory firms in Massachusetts in 2020. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015, 2016, 2018 and 2019.
Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.
You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.
Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.
The Barron’s America’s Best Independent Advisers rankings consider factors such as assets under management, revenue produced for the firm, and quality of practice as determined by Barron’s editors. According to Barron’s, “around 4,000” advisory firms were considered for this recognition in 2020; with about 1,200 firms receiving recognition. The award sponsor has not disclosed how many firms were surveyed or considered for this recognition, nor the percentage of total participants that ultimately received recognition. For more information and a complete list of recipients visit https://www.barrons.com/report/top-financial-advisors/1000/2020. Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014.
The Barron’sTop Advisor Rankings by State (Massachusetts) (also referred to as Barron’s Top 1,200 Financial Advisers) considers factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. According to Barron’s, “around 4,000” advisory firms were considered for this award in 2020, with about 1,200 firms receiving recognition. For more information and a complete list of recipients visit https://www.barrons.com/report/top-financial-advisors/1000/2020?mod=article_inline. Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014.
The Financial Times300 Top Registered Investment Advisers is an independent listing produced annually by the Financial Times and Ignites Research. According to the Financial Times, in 2019, approximately 2000 firms were invited to be considered for its list; 740 responded, with 300 being named to this list. The listing reflects each practice’s performance in six primary areas: Assets under management (70-75% of a firm’s score), asset growth (15% of a firm’s score), years in existence, compliance record, credentials and online accessibility. For more information and a complete list of recipients visit https://www.ft.com/content/44d2b2b2-6cef-11e9-9ff9-8c855179f1c4. Years Received: 2019, 2018, 2016, 2015 & 2014.
Awards referenced above do not consider client experience and are not indicative of such. Nor are awards indicative of future performance. Unless otherwise noted, Adviser Investments does not pay a fee to participate in any of these awards. Additionally, awards typically only consider and recognize participants that choose to participate; and are often based on information supplied by the participants—such information should not be assumed to be verified by the sponsor of the award.
The Adviser You Can Talk To Podcast is a registered trademark of Adviser Investments, LLC.