Ivanna Hampton: Vanguard is evolving as it grows bigger while keeping its “investor first” reputation intact. Investing Insights recently examined the 2026 outlook for the large asset manager in a two-part series. I spoke with Dan Sotiroff on April 8, 2026. Here’s what the Vanguard analyst and Associate Director of US Passive Strategies Research for Morningstar had to say about the firm. Let’s pivot to investments. Vanguard pioneered ETF share classes for mutual funds. It started with index-tracking investments. It has applied to expand that to actively manage mutual funds. What is the advantage of this structure, and will it work as well with active funds?
Daniel Sotiroff: Yeah. We were chatting about this before we went live, right?
Yeah, it’s all about tax efficiency. The ETF, it’s no secret, is just much more tax-efficient in that it defers capital gains until when an investor actually sells out of the fund. And so that’s sort of the carrot that’s hanging in front of Vanguard and a lot of other asset managers right now. A lot of people are leaving mutual funds, and that’s triggering a lot of capital gains distribution. So the ETF is just much better at handling those types of situations. It’ll work the same for actively managed mutual funds as it does for index funds. The mechanism is baked into the ETF structure, and so that continues to exist so long as it’s well managed, and Vanguard knows how to manage ETFs, so I have no concerns there. There are some considerations, though, when you look at this. This isn’t going to work for all mutual funds and all of Vanguard’s actively managed mutual funds.
Active funds lose their ability to shut their doors to new money. And we know that’s something that really good active managers typically like to do when they start to get too big, and their size eats away at their advantages, or their “edge,” as we call it. The other thing, and I believe this is the case, is that they would have to disclose their holdings every day, and not every active manager is really comfortable with that. They don’t want people front-running their trades. So there’s trade-offs to consider. It’s not just, this is a rubber stamp. We’re automatically going to do this. This is going to be great. You actually have to think about it. And that’s sort of the sticking point here. So many people are moving to ETFs, and that’s clearly the direction a lot of asset management is going, but it’s not going to work great for everybody.
Mutual funds still make sense for others. So what we’re seeing is they’re kind of picking and choosing maybe where they’ll go. And I expect Vanguard’s probably going to be doing the same. They’re going to be evaluating certain funds to see if it makes sense.
Hampton: Now the firm has recently launched three new active equity ETFs.
Sotiroff: Yeah. Tongue twister, right?
Hampton: Yes. Active equity ETFs. What are they, and what should everyday investors know about them?
Sotiroff: Yeah. So I’ll rattle off the names here. Vanguard Wellington US Value Active ETF. The ticker is VUSV. Vanguard Wellington US Growth Active ETF. Ticker is VUSG. And Vanguard Wellington Dividend Growth Active ETF. Ticker is VDIG, or VDIG. I think, in general, when you look at all of them, Vanguard made some really smart choices with these. You can’t really go into ETFs with a lukewarm approach. You got to come out and put your best foot forward, so to speak. The environment is just too competitive. There’s one of everything out there, sometimes multiples of everything. So you got to stand out in some way to at least get some attention. But they also did this in a very Vanguard-like way, so the fees are really low. VDIG, the dividend growth ETF I mentioned, is charging 40, and that’s the most expensive—40 basis points.
The growth ETF is charging 35, and the value ETF is charging 30. So more expensive than an index fund but still relatively cheap when you stack it up against the actively managed peers in their categories. And the other thing they did that I thought was really smart was they took advantage of their relationship with Wellington. They’ve had this long-standing relationship with Wellington from day one. Bogle used to be the CEO of Wellington before he founded Vanguard. So they go back 50, 51 years now. But it makes sense. Wellington is a very highly regarded asset manager. They go after strategies that are designed for the long term, very cost-effective, low turnover, all that type of great stuff that we love in a long-term investment. And they’re going to be following similar, if not identical, strategies to what they already have in mutual funds.
So it’s not going to be super difficult to get your head around what they’re doing and what they’re offering in these. So on that front, it fits into, like I said, it’s something that’s differentiated, it’s cheap, but it also fits into Vanguard’s low-cost, investor-friendly type of investment.
Hampton: Any word of when these funds would come under Morningstar coverage?
Sotiroff: Yeah, we’ve looked at them. I think there’s thoughts about that. We’ve already talked to the managers, myself and Todd Trubey actually met with them, I believe back in February. We know Peter Fisher pretty well. He’s managing the dividend growth ETF. He also manages the dividend growth mutual funds, so we’re familiar with him and his team. So it’s a very, very real possibility. We just kind of need to give them a little bit of time to build up a track record so we kind of understand what’s going on inside the funds with their trades and that type of stuff and then give them a little bit of time to actually grow their assets and show that investors are interested. So I suspect that’s just a matter of time, though.
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