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Vanguard continues to drive greater value for Australian investors with fee reductions announced across four strategies

Vanguard | 25 June 2019


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Vanguard Australia announces today it will lower fees on a number of its most popular funds and ETFs on 1 July 2019 in keeping with its long-term commitment to helping investors achieve their investment goals by delivering high-value investments.

The fee reductions include one of Vanguard’s largest funds, the Vanguard Australian Shares Index Fund, which currently manages more than $15 billion for Australian investors. It will see a fee reduction of two basis points, to 0.16% per annum.

The other funds benefitting from fee reductions include the Vanguard Australian Shares High Yield Index Fund fee which will also move lower to 0.35% representing a reduction of three basis points, and the Vanguard Australian Government Bond Index Fund will see the largest reduction of five basis points, moving to 0.24% a year.

The Vanguard Australian Shares Index ETF (VAS) - currently the second largest ETF on the Australian share market will see a reduction of four basis points with a revised management fee for the ETF of 0.10% per annum. In practical terms, this means a $10,000 investment in the ETF will cost just $10 a year plus trading costs.

The latest fee cuts are in addition to two price drops implemented earlier this year for Vanguard’s US Total Market Shares Index ETF (VTS) and All-World ex-US Shares Index ETF (VEU).

These ongoing fee reductions highlight how Vanguard’s Australian investors directly benefit not only from increasing scale in the local and international funds, but also from The Vanguard Group’s mutual ownership structure in the US.  Vanguard’s interests are aligned with the interests of investors – with this structure driving the culture, philosophy and policies throughout the Vanguard organisation worldwide. 

Vanguard’s Head of Product and Marketing, Evan Reedman, said “Vanguard takes a lot of pride in being able to pass along the benefits of increasing scale in our funds and driving costs down over time for our investors, it is in the DNA of our organisation and it is something we will continue to focus on across our full product suite.”

“We welcome recent announcements from other product issuers who are also moving to lower costs, as it is one of the most controllable aspects of investing.

“While some issuers may offer lower prices on select products, Vanguard is committed to delivering high value and low cost across our broad range”, said Mr Reedman.

A history of delivering for Australian Investors

Through an ongoing commitment to cost reduction, over the past 10 years alone Vanguard has delivered more than 25 fee cuts across our growing range of active and index investment offerings for Australian investors.

To do so, Vanguard conducts periodic reviews across its entire product range to identify candidates for fee reductions.

Each product has unique factors driving its pricing such as the underlying product structure, economics and fixed costs, however our efforts are focused on optimising each offering for the ultimate benefit of investors.

Beyond costs

Mr Reedman commented that while investors should pay close attention to costs, it shouldn’t be the only determinant in choosing the right investment fund for their portfolio.

When it comes to evaluating one fund or ETF over another, there are three main criteria investors should consider – coverage, total cost and track record.

Coverage refers to how well the market or market segment is captured by the fund, products within the same asset class may not offer the same exposure.

“Considering total costs means looking beyond the headline MER to understand the all-in cost of the investment such as performance fees, buy/sell spreads, and in the case of ETFs, brokerage costs. The track record of the issuer is also a key consideration which refers to the expertise and depth of experience of the fund manager.

And even before comparing one product with another, a first step for any investor is to consider how a proposed investment fits with their asset allocation strategy and contributes towards achieving long term investment goals,” Mr Reedman said.

Lowering the cost of active management

Vanguard has successfully lowered the cost of investing across the globe within both index and active investment solutions. The expansion of our active product line-up in Australia will continue to deliver on this fundamental commitment, removing a significant hurdle to active funds’ outperformance and increasing the chance of success for investors.

To provide choice for investors based on their unique needs we are committed to expanding our range of high quality, low cost active investment solutions in the coming years.

Details of fee reductions to date in 2019

Fund/ETF

Reduction

From

To

Effective date

Vanguard Australian Shares Index Fund

0.02%

0.18%

0.16%

1 July 2019

Vanguard Australian Shares High Yield Fund

0.03%

0.38%

0.35%

1 July 2019

Vanguard Australian Government Bond Index Fund

0.05%

0.29%

0.24%

1 July 2019

Vanguard Australian Shares Index ETF (VAS)

0.04%

0.14%

0.10%

1 July 2019

Vanguard US Total Market Shares Index ETF (VTS)

0.01%

0.04%

0.03%

29 April 2019

Vanguard All-World ex-US Shares Index ETF (VEU)

0.02%

0.11%

0.09%

26 February 2019


About Vanguard

With more than AUD $7.6 trillion in assets under management as of 31 March 2019, including more than AUD $1.4 trillion in ETFs, Vanguard is one of the world’s largest global investment management companies. In Australia, Vanguard has been serving financial advisers, retail clients and institutional investors for more than 20 years.


Martha Wood
Media & External Communications Manager
Vanguard Australia
martha.wood@vanguard.com.au
+61 410 470 165

Michael Thorneycroft
Corporate Communications Manager
Vanguard Australia
michael.thorneycroft@vanguard.com.au
+61 411 639 636