Vanguard enters ETFs fray
Thursday, 7 May 2009 12:30pm
Vanguard Investments Australia will go head to head with local exchange traded funds (ETFs) incumbents iShares and State Street when it launches three new ETFs on the ASX tomorrow.
The group, which is already one of the largest providers of ETFs in the US, will start with three products on the ASX namely the Vanguard Australian Shares Index ETF, the Vanguard All-World ex-US Shares Index ETF and the Vanguard US Total Market Shares Index ETF.
These new ETFs will appeal to financial planners because of their low cost, with management fees ranging from as low as 0.09 per cent to 0.27 per cent - competing with the likes of the iShares S&P 500 (0.09 per cent) and the iShares Russell 2000 (0.2 per cent).
All three ETFs will list on the ASX AQUA platform. The Vanguard All-World ex-US Share Index ETF and the firm's US Total Market Shares Index ETF are also cross-listed on the New York Stock Exchange (NYSE).
Vanguard's ETF approach will be somewhat different to iShares, which targets countries and specific industries.
"The products we'll launch will line up with Vanguard's overarching philosophy which is about broad market diversification so I wouldn't expect us to offer country specific ETFs, that doesn't fit with what we do," said said Robin Bowerman, head of retail at Vanguard Investments Australia.
"We're looking for more broader regional approaches in Asia, the US and world market," he added.
While ETFs have gradually gained traction in the retail community, local institutional investors have been a harder market to crack, which is why Bowerman said that while the initial focus of this ETF suite will be financial planners, the plan is to educate the Australian institutional market on the product.
Michael Hobbs
