View more on these topics

Vanguard takes ETF lead

Passive investment specialist Vanguard Asset Management has introduced a range of five Dublin-domiciled exchange traded funds that are trading on the London Stock Exchange.

The new ETFs are all physically backed. This means they invest directly in securities that make up their respective indices, so do not track synthetically using derivatives. The company chose to replicate the indices physically because it sees this model as straightforward and easy to understand.

The total expense ratio of the five ETFs vary between 0.09 per cent and 0.45 per cent, with the cheapest being Vanguard S&P 500 ETF and the Vanguard FTSE emerging markets ETF the most expensive. Vanguard’s S&P 500 and FTSE 100  ETFs are cheaper than most equivalent products from other ETF providers that are active in the UK market.

iShares has a TER of 0.4 per cent for its FTSE 100 and S&P 500 ETFs, while HSBC’s ETF range offers a S&P 500 ETF at the same TER as Vanguard, but a higher TER of 0.35 per cent on its FTSE 100 ETF. The db X Trackers range has a FTSE 100 ETF with a 0.3 per cent TER and a choice of S&P 500 ETFS with TERs of 0.2 per cent and 0.3 per cent, but these products are not physically backed and track the index using a type of derivatives contract known as a swap.

The other ETFs in the Vanguard range are more unusual, as many ETFs that are aimed at UK investors track MSCI indices for emerging markets and global equities. The ETFs are run in the same way as Vanguard’s passive funds, with both offering a low-cost way to access broadly diversified stock and bond investments.

Research by Platforum recently found that advisers expect to increase exposure to passive investment strategies over the next six months, which may indicate demand for Vanguard’s new fund range. Some advisers who want to implement low-cost passive strategies for clients may prefer simple tracker funds rather than ETFs. Others may opt for ETFs such as Vanguard’s because they can be traded on an exchange like shares, with the diversification of tracker funds.



MP urges FSA to force redress for missold interest rate swaps

An MP is calling for the FSA to set up a compensation package for small and medium-sized businesses which have been missold interest rate swaps. Conservative MP for Aberconwy Guto Bebb has secured a half-day debate on the issue in the House of Commons today after the FSA announced it is conducting a review into […]

What advisers are saying- provider service levels

A key principle of success in all walks of life is a willingness to go the extra mile – “the rendering of more and better service than that for which one is paid” (Napoleon Hill 1920). It is difficult to find many instances of enduring success, which were not attained in part by the application […]

Nigeria cover image - thumbnail

White paper — Nigeria International Insights

Jelf Employee Benefits closely examines healthcare provision and challenges within Nigeria. This will be of particular interest to HR decision makers with employees based in Nigeria, and assesses the environment, risks, facilities and safeguards that are relevant to organisations that are actively deploying expatriate staff in this location.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm