Vanguard Investments Australia has added three new exchange-traded funds (ETF) to its product range, including a dividend-focused ETF.
The three new products are the Vanguard Australian Shares High Yield ETF, Vanguard MSCI Australian Large Companies Index ETF and Vanguard MSCI Australian Small Companies Index ETF.
The high-yield ETF is based on an existing Vanguard managed fund and aims to track the FTSE ASFA Australia High Dividend Yield Index.
It includes 63 companies and has a management expense ratio (MER) of 25 basis points per year.
The small companies ETF costs 30 basis points, while the large companies product costs 20 basis points.
The new ETFs will start trading on the Australian Securities Exchange from 26 May.
Vanguard also reduced the MER for its Australian Shares Index ETF from 27 basis points to 15 basis points per year.
The Vanguard Australian Property Securities Index ETF was cut from 34 basis points to 25.
The reduction in price partly reflected the lower cost of servicing the products compared to managed funds.
"There are different operational and servicing costs around it," Vanguard head of corporate affairs and market development Robin Bowerman said.
"But it is also important that we see ETFs as a product category that we think will grow in the future, so a lot of it is about the scale going forward."
Pricing was an important reason for financial advisers to choose a product, he said.
"Cost is a really big factor in terms of the selection criteria," he said.
He said he expected to see a growing demand from self-managed superannuation fund (SMSF) investors.
"Self-managed super funds are obviously a large target market; they are the largest part of our super scheme and they are people who are very comfortable with direct equities and have direct equities in their portfolio," he said.
The high dividend ETF could also cater for the needs of post-retirement investors.
"[The] SMSF segment of the market is where we see a demand for that product, but it can be a very income-focused product for those in retirement," Vanguard head of product development and management Robyn Laidlaw said.
Laidlaw, whose role was recently expanded to include managed funds, said Vanguard's ETF-related assets under management had grown to $300 million from $100 million in February 2010.
