3 Active Vanguard Funds That Would Make Great ETFs

Furthermore, the fund charges an all-in expense ratio of just 0.15% annually. That is tremendously cheap compared to its peer group and it has posted very steady returns over its tenure as well. Vanguard lists the 10-year annualized return of VWIAX at 6.74% through 12/31/16.

I have owned VWIAX for clients of my wealth management firm for several years now because I have yet to come across a competitor that can offer similar or better qualities. The fund is cheap, its performance is outstanding, and it strikes just the right balance of risk and reward for more cautious investors.

Vanguard PRIMECAP Fund Admiral Shares (VPMAX)

VPMAX has the distinction of being in a select group of Vanguard mutual funds that are closed to new investors. Fund companies often employ this tactic if they feel the size of the fund will adversely affect the long-term strategy and don’t want it to become bigger than they can handle. However, this one is definitely on my wish list for an ETF version.

This mutual fund invests in a diversified group of 130 large and mid-cap stocks that the manager feels offer superior growth potential. The hallmarks of the strategy are low turnover, low costs, and a long-term perspective. VPMAX charges an expense ratio of 0.33% and has demonstrated an impressive track record as well.

The fund has beat both the SPDR S&P 500 ETF (SPY) and Vanguard Total Stock Market ETF (VTI) over the last five years. The fund company website also lists the annualized 10-year performance at 9.41% annualized through 12/31/16. The fund has nearly $50 billion in total assets largely because of its superior performance story.

I know it’s a long shot, but this one would be an excellent actively managed U.S. equity ETF.

Vanguard Strategic Equity Fund (VSEQX)

VSEQX is an actively managed stock mutual fund that focuses on small and mid-capitalization companies. The fund is managed by Vanguard’s own in-house Quantitative Equity Group. The purpose of this fund is to select smaller, more aggressive stocks with the potential for outperformance versus the benchmark. Currently the fund owns 368 stocks and has $6.8 billion under management.

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