True to its heritage of delivering a better deal for investors, Vanguard today announced a reduction in the management cost for seven of its wholesale index fund offerings.
The announcement coincides with the 15-year anniversary of Vanguard’s range of index funds for wholesale investors in Australia.
Speaking at a briefing in Sydney today, Vanguard’s Head of Product Management and Development, Robyn Laidlaw said the decision to reduce fees was possible due to significant growth in these funds and Vanguard’s ongoing commitment to maintain low cost fund offerings for investors.
“In an environment where costs matter more than ever, we are delighted to provide greater value to our investors,” Ms Laidlaw said.
“This announcement today sees some of our funds moving to about one fifth1 of the average Australian managed fund fee of the comparable asset classes.
“As a subsidiary of a client-owned parent company, which now manages in excess of $1.9 trillion for investors globally, we are well positioned to be able to pass on the benefit of growth in our funds back to our clients,” she said.
The reduced fees will take effect as at 1 August 2012.
Robin Bowerman, Vanguard’s Head of Corporate Affairs and Market Development explained what lower costs might mean in today’s investment environment.
“This month marks 15 years since Vanguard began offering low cost index funds to Australian investors. Over that time, for every $100,000 invested in Vanguard’s Australian Shares Index Fund2, an investor would have made a saving due to a lower headline fee of over $25,000 versus a fund with an industry average fee.
“Both institutional and advisory businesses today are facing greater pressures on the fees they charge, with regulatory changes and market conditions shining a spotlight on fee structures,” said Mr Bowerman.
“Investors are no longer accepting of paying high fees for volatile performance, and rightly so.
“In bear markets, investors unfortunately see the compounding effect of higher fees, when returns are in single digit or negative territory,” said Mr Bowerman.