Vanguard Investments Australia (Vanguard) yesterday announced it will launch its exchange-traded funds (ETFs) for local investors.
Vanguard's new ETFs represent an alternative way for advisers to access the group's indexing approach, which can assist in reducing overall costs for clients and manage risks through diversification, Vanguard's head of retail Robin Bowerman said.
Take-up of ETFs in Australia has been muted compared to other markets, but with more providers like Vanguard entering the market the product's popularity should be boosted, he said.
"More products are needed so advisers can build comprehensive portfolios, and getting across the message that in these sorts of markets ETFs are extremely useful asset allocation tools will also help," Bowerman said.
He said advisers can expect Vanguard's ETF fees to be very competitive.
The firm wasn't able to unveil any particular ETFs it would launch as it is still waiting for regulatory and legal approvals.
Vanguard is the third-biggest provider of ETFs in the United States and its most popular ETF is the Vanguard Total Stockmarket fund, which covers the broad US sharemarket.
When it comes to portfolio performance, it's not the funds adviser's pick that make a difference but rather their asset allocation choice, Bowerman said.
"What really mattered was how much of the portfolio was in equities versus bonds," he said.
"It's that asset allocation decision. At Vanguard we argue that around 80 to 85 per cent of your portfolio's return comes from your asset allocation."
Should Vanguard's offerings pass legal and regulatory approvals, the group would become fourth ETF provider in Australia along with State Street, ETF Securities and Barclays' iShares unit.
ETFs track a market index and are bought and sold exactly like shares.
