Vanguard’s exchange-traded funds (ETFs) business, the world’s third largest in terms of assets under management behind BlackRock iShares and SSgA SPDR, is growing from strength to strength as more and more investors buy in to the firm’s low-cost, straightforward approach.
Vanguard has enjoyed huge success in the ETF space thanks to a focus on low fees, an emphasis on education and the avoidance of faddish or overly complex products.
The US-headquartered firm, which was founded by indexing pioneer John Bogle in 1975, has enjoyed ETF success both in its domestic US market but also overseas, including here in Europe, as well as Canada, Australia and most recently Hong Kong.
In Europe, ETF highlights for the first six months of 2013 include the expansion of its UK range, adding four new funds to the five it listed on the London Stock Exchange in 2012, and its debut in Continental Europe with the introduction of seven ETFs on the SIX Swiss Exchange and on the NYSE Euronext exchanges in Amsterdam and Paris. As of the end of June, these European-listed ETFs held $1.4 billion in assets under management.
Tom Rampulla, managing director for Vanguard in Europe, said: “The swift growth of our European ETF business is testament both to increased investor appetite and the changing regulatory focus of the investment market. Vanguard is committed to educating the market on the benefits ETFs present as core building blocks of low-cost diversified portfolios.”
He added: “Like our traditional mutual funds, our physically-backed ETFs offer investors a simple, low-cost way to gain broadly diversified market exposure and our business is growing as investors increasingly embrace high quality and transparent funds.”
In the US, Vanguard has led the industry this year, with inflows of $26 billion year-to-date through June 30, 2013. The firm has also continued to broaden its product line-up, introducing three new fixed-income ETFs, and lower fees, cutting expense ratios on 56 of its ETFs over the past year.
Elsewhere, the firm’s ETF offerings appear to be thriving too, with assets under management around the $1 billion mark in both Canada and Australia, and the firm making in-roads into the fast-growing Hong Kong market.
Vanguard’s success in the ETF space seems to be down to its focus on low fees, emphasis on education and avoidance of faddish or overly complex products. The firm’s independence and cooperative-like structure – where shareholders of its funds essentially own the firm – also appeals at a time when some bank-owned asset management firms have come under scrutiny.
Jim Norris, managing director for Vanguard International, said: “Investors worldwide have become more focused on broad diversification, low investment costs and transparency – the key characteristics of index funds and ETFs. It is gratifying to see investors embracing the Vanguard way of investing as we seek to best position them for long-term financial success.”
(All asset figures are as of June 30, 2013)