The hallmarks of Vanguard’s exchanged-traded funds (ETF) are broad diversification across respective asset classes, transparency and low cost.
According to Vanguard Australia head of product Evan Reedman, for both SMSF trustees and financial advisers working in the sector, the business’s broadly diversified, low-cost ETFs provide the building blocks for total portfolio solutions, as well as ideal options for SMSF portfolios to access traditionally less common asset classes such as global shares and bonds.
“In many ways, a successful ETF product suite is not so much about constantly trying to do new and different things, but rather ensuring the fundamental traits of ETFs are delivered at the highest quality to investors,” Reedman explains.
“At Vanguard, that means working closely with market makers to ensure optimal liquidity for investors and ensuring all our ETFs are able to serve investors over a long-term investment horizon.”
The firm’s ETF products have continued to attract strong investor interest this year, with steady flows across asset classes.
“We have received cash inflows in excess of $1 billion so far this year, which we see as a great vote of confidence in our offering,” Reedman reveals.
“Global shares and Australian equities have continued to attract strong SMSF interest. We see global fixed income, which has only been available to ETF investors for a relatively short time, as an area of emerging interest for SMSFs, which have typically had little exposure to this asset class.
“The 2017 Vanguard/Investment Trends SMSF Reports again showed a strong home bias in SMSF portfolios, pointing to the opportunity for SMSFs to use ETFs to diversify into asset classes like global shares and bonds to try and counter their concentration in Australian shares, property and cash.
“Positively, however, was the number of SMSFs saying they intended to use ETFs in the coming year, predominantly in global shares, although significant interest in broad market Australian shares endures.”
Vanguard is also constantly assessing where it can offer ETF products that adhere to its mantra of low-cost diversification with long-term viability.
“Another key process for Vanguard is our regular reviews of our fund management expense ratios (MER) to see where we may have capacity to lower our management fees, thus allowing investors to keep more of their returns,” Reedman notes.
“Just this year alone we have been able to lower our MERs across 10 of our active and index funds.
“In addition to cost, transparency is key and we have a strong focus on providing true-to-label products that can give our clients confidence in what they are investing in.
“We have a great team that are constantly working closely with our clients to support them and are always eager to hear feedback on how we can better serve them.”
He says the award win has spurred Vanguard to continue its mission to give its clients the best chance of investment success.
“Our people are a large driver of this success,” he notes.
“From our investments team, to our product and ETF capital markets teams, the finance team, those who work directly with our clients and so many more – we really are seeing great results driven by the combination of all this diligent work.”