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Vanguard looks to add cash and property index funds

Vanguard is looking at launching a cash tracker fund and a property tracker fund as the firm looks to fill gaps in its 21-strong tracker range.

Head of retail and European product development Nick Blake says while both funds would be difficult to launch successfully, there is demand in the market.

He says: “We are looking at a property and cash fund but both are difficult propositions to pull off. There are not many property tracker funds available, so demand from investors is there but the challenge is what index do you track with property? We could possibly track a global real estate investment trust index.”

Blake says there is demand for cash funds despite low interest rates.

He says: “Cash is a difficult area of the market because of the low interest rates. By the time the fund manager has taken charges on the fund, some investors get negative returns. We would still look at it though because it is one of those temporary asset classes that advisers want to park money in while they are doing asset allocation in portfolios.”

Bestinvest senior research analyst Ben Seager-Scott says: “It makes sense for Vanguard to cover all the bases, as correlation and diversification are key considerations when constructing a portfolio and cash and property are important diversifiers.”

Vanguard says its second tranche of exchange-traded funds will include developed market equity and bond ETFs but Blake says the firm has not yet set a date for the launch.



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