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Vanguard unfazed by BetaShares undercut

Vanguard unfazed by BetaShares undercut

Aleks Vickovich

Vanguard has doubled down on its commitment to low cost investment in light of competitor BetaShares launch of the world’s cheapest Australian equities ETF.

On Thursday, BetaShares announced the launch of a new Australian shares ETF with management costs of just 0.07 per cent, half that of the 0.14 per cent charged by the Vanguard fund that was previously the lowest cost product in this category globally.

Reflecting on the announcement, Vanguard Australia head of corporate affairs Robin Bowerman told InvestorDaily his organisation can demonstrate a widespread commitment to its investment philosophy notwithstanding the activity of market competitors.

“The good news is that costs continue to drop, both in Australia and globally, for investors,” Mr Bowerman said.

“While other firms may lower costs on a few funds or offer a separate brand of low-cost products to attract assets, Vanguard’s commitment to driving down the cost of investing is in our DNA, so investors get to keep more of their returns.”

Mr Bowerman did not specifically address whether Vanguard may opt to amend the management costs for its Australian Shares Index ETF to match BetaShares’ new offer, but said the firm conducts regular reviews of its fund costs and operations.

“In fact, Vanguard Australia lowered the MERs on 10 of its index and active funds and ETFs in 2017 alone,” he said.

More broadly, Mr Bowerman said that while cost is an important issue for investors to consider, they should also be wise to factors such as tracking, pre- and post-tax returns and benchmark composition when investing in ETFs.

“Vanguard represents more than just low costs,” he said. “To accomplish our mission of giving investors the best chance for investment success, we offer high-performing products and high-quality services while keeping costs at the lowest reasonable levels.”

In launching the new product in Sydney on Thursday night, BetaShares chief executive Alex Vynokur said one of the outcomes is that the lowest cost Australian shares ETF will now be on the ASX instead of being listed in New York.

He described the move as a “game-changer for the Australian wealth management industry” and anticipated interest from institutional as well as retail investors.

 

Vanguard unfazed by BetaShares undercut
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