Read more: The follies of factor fund investing
Despite the setback, the company still maintains its support for factor investing. But the firm’s dedication to a line of products that haven’t exactly been the runaway successes has at least one analyst in doubt.
“Poor performance, low usage (assets) and the manager departure are not unique to Liquidity Factor ETF, which would argue for this being a sign of things to come,” Adviser Investments’ chief of research, Jeffrey DeMaso, told the Financial Times.
Drawing on information from the Adviser Investments database, DeMaso pointed to another fund in the suite, the US Minimum Volatility ETF, which had only US$69mn in assets as of the end of August. He also noted that Antonio Picca, the founding portfolio manager for the factor suite, left Vanguard in July.
Recently, other asset managers have also rationalized their smart beta and factor lines. Earlier this year, Nationwide discontinued its three smart beta ETFs. Franklin Templeton, WisdomTree, Principal, and Alpha Architect have all made substantial changes to their own factor-investing families.
