Active ETFs: Vanguard is back with a euro cash fund!
Vanguard has re-entered the European active ETF market with the launch of a euro cash fund five years after it pulled out citing insufficient investor demand.
In a sign of more positive times in the rapidly growing active exchange-traded fund segment, the index-tracking giant listed the Dublin-based EUR Cash UCITS ETF on Euronext, with the ticker VCSHA, Deutsche Borse (VCAA) and Borsa Italiana (VCSHA) last week.
Vanguard Funds said its global fixed income team would employ an “active management” strategy to preserve capital, although the money market fund is not protected or guaranteed, while maintaining a high level of liquidity and providing a return in line with short-term euro money market rates.
It will invest in high-quality euro-denominated Treasury Bills from governments and other short-term debt instruments issued by agency, supranational organisations, local authorities and corporations, including time deposits and reverse repurchase agreements (under which the fund buys securities from a seller who agrees to repurchase them at an agreed date and price).
The weighted average maturity of the portfolio will not exceed 60 days, and the weighted average life of the fund’s holdings will not exceed 120 days.
Performance will be measured against the compounded Euro Short-Term Rate (€STR) published by the European Central Bank, although the investment manager is not restricted to selecting investments from any benchmark.
Ongoing charges will be seven basis points or 0.07% a year.
The new fund will compete with short-dated money market funds from the likes of Franklin, JP Morgan and Pimco.
Our view
David Batchelor, senior analyst at QuotedData, said: “Vanguard quit the European active ETF market back in 2020 due to “insufficient investor demand”, so its re-entry now feels significant. The firm is a behemoth in the ETF space, but is synonymous with passive strategies. This new product, Vanguard EUR Cash UCITS ETF, is clearly at the very low-risk/ low-fee end of the market, but I wouldn’t be at all surprised to see the company launch further active ETF products in 2026.”
