Vanguard expands low-cost London-listed ETF range

May 22nd, 2013 | By | Category: Equities

Index investing giant Vanguard has expanded its European suite of low-cost exchange-traded funds (ETFs) with the launch of four new funds on the London Stock Exchange.  The new ETFs complement the firm’s existing London-listed line-up, which debuted in May 2012. [See Vanguard undercuts rivals with low-cost London-listed ETF range].

Vanguard extends low-cost London-listed ETF range

Axel Lomholt, Head of International Product Development and Management at Vanguard.

The broadening of Vanguard’s European line-up underscores the firm’s commitment to providing low-cost, physically replicated ETFs to investors globally, and reflects the growing interest in index products across the region, particularly in the UK following the introduction of the Retail Distribution Review (RDR).

Commenting on the launch, Axel Lomholt, Head of International Product Development and Management at Vanguard, said: “ETFs are growing in popularity in Europe and our experience in other markets suggests that this trend will continue.”

He added: “In the US, Vanguard has been very successful in this area, gathering nearly $290 billion of assets since its first ETF launch in 2001. We think that the same low-cost, straightforward approach will prove equally popular in Europe as investors seek the most cost-efficient products to help them reach their goals.”

The four new Vanguard ETFs, which are listed below, are linked to the following FTSE indices: the FTSE Developed Europe Index, the FTSE Developed Asia Pacific ex Japan Index, the FTSE Japan Index, and the FTSE All-World High Dividend Yield Index.

FTSE has been used by Vanguard globally since 2003 and is the index provider to a number of the firm’s most successful products including the gigantic NYSE Arca-listed Vanguard FTSE Emerging Markets ETF (VWO), which has some $58 billion in assets.

“FTSE offers best-in-class index construction and its benchmarks provide comprehensive coverage of their respective markets. Vanguard is pleased to extend its deep relationship with FTSE”, said Lomholt.

Jonathan Horton, Head of FTSE’s ETP Service Unit, added: “We are delighted that Vanguard has selected FTSE to help develop its European product suite. FTSE’s focus on providing the highest quality indices, coupled with our dedication to service provision, tradability and index governance makes FTSE a natural choice for ETF issuers who want to give investors better choice, no matter where in the world they are, or where they want to invest.”

The new funds will likely gain instant traction owing to their low cost and simplicity. Indeed, the funds immediately become some of the cheapest in their categories. For example, at just 0.19% per annum, the Vanguard FTSE Japan UCITS ETF (VJPN) is less than half the price of comparable Japan equity ETFs offered by rivals iShares, db X-trackers, Lyxor, Source, Amundi, UBS (advisor share class) and HSBC.

Similarly, with interest rates at all-time lows, the firm’s Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL), which tracks global stocks with a higher-than-average dividend yield, is likely to do well given it is a full 16 basis points (bps) cheaper than the recently launched SPDR S&P Global Dividend Aristocrats UCITS ETF (GBDV) and 21 bps cheaper than the db X-trackers Stoxx Global Select Dividend 100 UCITS ETF (XGSD), the fund’s two nearest rivals.

There are now nine ETFs in Vanguard’s London-listed product suite:

Fund Ticker TER
NEW Vanguard FTSE Developed Europe UCITS ETF VEUR 0.15%
NEW Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF VAPX 0.22%
NEW Vanguard FTSE Japan UCITS ETF VJPN 0.19%
NEW Vanguard FTSE All-World High Dividend Yield UCITS ETF VHYL 0.29%
Vanguard FTSE 100 ETF VUKE 0.10%
Vanguard S&P 500 ETF VUSA 0.09%
Vanguard FTSE Emerging Markets ETF VFEM 0.45%
Vanguard FTSE All-World ETF VWRL 0.25%
Vanguard UK Government Bond ETF VGOV 0.12%

The funds are domiciled in Ireland and registered for distribution in Denmark, France, Ireland, Germany, Luxembourg, Netherlands, Sweden, Switzerland and the United Kingdom.

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