Vanguard’s CEO, Tim Buckley, is being urged to take Vanguard’s low cost model into more foreign markets. You probably haven’t had the time to research the investment options available to foreigners, but in short they tend to be expensive and narrow. That’s just the kind of market that screams for the low cost model Vanguard brings to its customers. FT’s Chris Flood writes of Buckley:
In May, Vanguard announced it would sell its funds directly to UK retail clients in a move that will intensify the competitive pressures facing rival asset managers. Liberum, the brokerage, predicted that a quarter of the new cash invested annually by UK retail clients could flow to Vanguard’s platform in the next three years.
The move immediately raised questions about whether Vanguard would replicate this strategy elsewhere in Europe, where its physical presence remains small.
Jim Norris, head of Vanguard’s international business, says the expansion of non-US operations has been “deliberate rather than slow”, as the company’s ambitions are part of a multi-decade strategy. He recognises, however, that there is more Vanguard could do to draw retail investors across Europe into its funds.
“ETFs are an area where we can do a lot more. Most ETF investors outside of the US are institutions. We don’t see any reason why individual retail investors will not be more significant buyers of ETFs over the next 20 years,” he says. “We are just scratching the surface in the UK. Our offering will develop and evolve. There is much more we can do in the defined contribution pensions space.”
In Germany, where Vanguard has historically lacked any real presence, plans are under way to open an office as a base for Sebastian Külps, who was hired in February as head of business development for the country.
The introduction of European rules in 2018 that will ban asset managers from paying commissions to financial advisers in return for product recommendations will additionally “open up new opportunities for Vanguard’s way of investing”, says Mr Norris.
Vanguard is also stepping up its activities in Latin America with the opening of an office in Mexico planned for next year. It already has 65 ETFs listed on the Mexican stock exchange.
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Low cost funds allow you to keep more of your dividends and capital gains. Always avoid funds charging you an arm and a leg for performance.