Vanguard To Liquidate And Shutter A U.S. Listed ETF For The First Time In Its History ~ Sept. 28, 2022

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Maybe this time, it is different…

Vanguard is shutting down and liquidating a U.S. listed exchange traded fund for the first time in the firm’s history, according to a new report by Bloomberg on Monday.

The investment giant is going to be shuttering the $39.7 million Vanguard U.S. Liquidity Factor ETF (ticker VFLQ) in late November, according to the report. It is liquidating the fund because it has “not gained scale since its 2018 debut.”

A company press release reads: “We continue to add new products that have investment merit and meet investors’ preferences, change advisors and mandates to improve investor outcomes, and eliminate funds that lack a distinct role in investors’ portfolios.” 

“Vanguard continues to believe in the long-term investment case for factor investing. Under the right circumstances, factor products may help investors achieve their financial goals,” the release continued. “The firm’s remaining U.S. factor products have a combined $3.4 billion in assets and continue to deliver value to a wide range of advisor and retail clients by employing a low-cost, rules-based, all-capitalization approach that provides investors with targeted factor exposure.”

The company said that shareholders are being notified and have the opportunity to sell their shares prior to the ETF delisting from Cboe BZX Exchange, Inc. at the close of business on or about November 22, 2022.

The investment giant has $1.8 trillion in assets across 82 ETFs and has not shuttered a U.S. based ETF in the past. 

VettaFi’s Dave Nadig told Bloomberg: “It’s not super surprising that they’d close the laggards down. As for why now? Nobody cares when you close products in a bear market.” 

“If the K-Pop ETF and filings for double-levered AMC ETFs weren’t good enough indicators that the ETF market is getting oversaturated, then maybe this Vanguard news will send a clearer signal,” said Morningstar’s Ben Johnson.

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