Vanguard Is Liquidating a US-Listed ETF for the First Time Ever

(Bloomberg) — Asset-management large Vanguard Group is shutting down considered one of its US exchange-traded funds for the primary time.

Most Learn from Bloomberg

The $39.7 million Vanguard U.S. Liquidity Issue ETF (ticker VFLQ) will probably be liquidated in late November, the agency stated in a press launch Monday. The fund “has not gained scale since its 2018 debut,” Vanguard stated.

The closure would be the first and solely liquidation of an American ETF for the Jack Bogle-founded agency because the $244 billion Vanguard Complete Inventory Market ETF (VTI) launched in 2001.

Malvern, Pennsylvania-based Vanguard controls practically $1.8 trillion in property throughout 82 US ETFs and is thought mainly for its ultra-low value, index-hugging funds. Actively-managed VFLQ, which carries a charge of 13 foundation factors, was an “odd match” from the get-go, in keeping with VettaFi’s Dave Nadig.

“It’s not tremendous stunning that they’d shut the laggards down,” stated Nadig, monetary futurist on the knowledge supplier. “As for why now? No person cares whenever you shut merchandise in a bear market.”

The liquidation comes as volatility ripples throughout asset lessons, with central banks across the globe trying to chill red-hot inflation. That turmoil is displaying up within the $6 trillion ETF business, the place 91 funds have shuttered up to now this 12 months in contrast with simply 71 closures for all of 2021, Bloomberg knowledge present.

VFLQ, which seeks to reap the benefits of the premium related to less-liquid shares, has misplaced about 23% this 12 months. That compares to a 22% loss for the S&P 500 Complete Return Index.

Vanguard’s determination to delist VFLQ additionally illustrates how crowded the ETF business has develop into, within the eyes of Morningstar’s Ben Johnson.

Story continues

“If the Ok-Pop ETF and filings for double-levered AMC ETFs weren’t adequate indicators that the ETF market is getting oversaturated, then possibly this Vanguard information will ship a clearer sign,” stated Johnson, Morningstar’s head of consumer options for asset administration.

Most Learn from Bloomberg Businessweek

©2022 Bloomberg L.P.