Vanguard has announced the expense ratio for the Vanguard® All-World ex-US Shares Index Exchange Traded Fund (ETF) – trading under the ASX code VEU – has been reduced from 0.18 per cent p.a. to 0.15 per cent p.a [1].
Discussing the change, Vanguard’s Head of Product and Marketing, Robyn Laidlaw said “Keeping investment costs low for investors is at the heart of Vanguard’s investment approach.
“This represents a big difference between Vanguard and some competitors in the investment management industry because low costs are not a marketing ploy – our expense ratios are not driven up or down based on market share goals or revenue targets.
“This fee reduction is a function of Vanguard’s mutual corporate structure in the US which allows economies-of-scale savings to be passed along to our investors in the form of lower expense ratios as fund assets grow,” said Ms Laidlaw.
VEU is a cross-listed [2] ETF tracking the FTSE All-World ex US Index which offers investors a diverse portfolio of around 2300 securities of companies located in both the developed and emerging markets.
VEU began trading on the Australian Securities Exchange (ASX) in May 2009 and in the US in March 2007. The total size of this ETF (including US and Australian investments) was A$8.1 billion as at 31 December 2012.
In the past 12 months Vanguard has announced significant price reductions across seven of its flagship Australian-domiciled wholesale index funds and two cross-listed ETFs. Since VEU was quoted for trading on the ASX in 2009 its management expense ratio has declined by 10 basis points.
Vanguard now offers a range of nine ETFs across Australian and international equities, Australian property and Australian fixed income and December 2012 figures show Vanguard’s total Australian ETF funds under management had grown from A$351 million at the end of 2011 to A$636 million as at 31 December 2012.
[1] Management costs are expressed as a percentage of the average net assets of ETFs. As the value of these assets may change over time, the actual management costs for a period may be higher or lower than the costs published in the prospectus.
[2] Cross-listed ETFs make it possible for Australian investors to access funds which they may not normally have access to on overseas share markets by cross-listing the fund on the local exchange. It is priced in local currency (e.g. Australian dollars) and sold (in Australia) as CHESS Depository Interests (CDIs).
