Vanguard adds three ETFs and cuts fees

17 May 2011

| By Chris Kennedy |

Vanguard has announced three new locally domiciled exchange-traded funds (ETFs) to its existing suite of four ETFs, and also slashed the fees on its two existing local ETFs.

The new products include a high yield ETF based on the FTSE ASFA Australian high dividend yield index which contains a basket of around 60 stocks, with a management expense ratio (MER) of 25 basis points.

The firm also announced a large cap ETF based on the MSCI Australian large cap index which covers the top 70 per cent market capitalisation of the Australian share market with a fee of 0.20 per cent; as well as a small cap ETF based on the MSCI Australian small cap index covering the bottom 15 per cent of the market with a fee of 0.30 per cent.

Vanguard also announced it would be reducing the MER on its Australian shares ETF from 0.27 per cent to 0.15 per cent, and on its property securities ETF from 0.34 per cent to 0.25 per cent.

Vanguard’s other two ETF products are a US total market shares ETF based on the MSCI US broad market index, which includes around 3,300 stocks; and an all-world ex-US shares index that tracks the FTSE all-world ex-US index, covering 46 countries and including emerging markets.

On the firm’s measured approach to releasing new ETF products, Vanguard’s principal, corporate affairs and development Robin Bowerman said he didn’t think it was necessarily a fantastic idea to be rapidly releasing large numbers of new ETF products. But he also said the firm would continue to look at new products, including potentially fixed income ETFs, with a view to adding some more products down the track.

The new and existing products are targeted at both institutional and retail investors, but so far the majority of the firm’s ETF growth in Australia has been through both advised and non-advised self-managed super funds, and direct high net worth investors, Bowerman said.