World leading index investor Vanguard is going to enter the superannuation sector.
Vanguard is a world leader in providing regular investors like you and I the opportunity to invest in various asset indexes with very low annual management fees because it is run for the benefit of its investors. This is an advantage for us because it allows us to keep more of our investment returns, rather than giving it to investment managers who may or may not deliver better returns for a much higher fee.
Vanguard To Enter The Superannuation World
Vanguard is attributed with the idea of pushing investment management fees lower and lower. It offers some of the cheapest ETFs on the ASX including Vanguard Australian Share ETF (ASX: VAS) and Vanguard US Total Market Shares Index ETF (ASX: VTS).
It’s now going to bring those low fees to the superannuation space according to reporting by the Australian Financial Review.
The Royal Commission has provided an opportunity for Vanguard to compete with the local superannuation funds. Vanguard feels confident to try it because it has been doing retirement products in the US and has been investing in its Australian business.
Vanguard Australia’s Robin Bowerman (who has been on the Rask Investors Podcast, see below) spoke to the AFR:
“If you think of the industry, from a standing start 25 years ago, we would have thought the scale benefits would have delivered lower costs given the system’s success.
“We see an opportunity to provide an alternative offering given the global footprint we have.”
But there’s a while to go. There’s a long licensing process that needs to be completed.
The AFR also reported that Vanguard is investing to upgrade its digital portal which would allow individuals to set up a Vanguard account online, invest in approximately 40 Vanguard managed funds, its ETF options and buy & sell shares in the ASX 300.
In the US this digital platform has seen older Americans embrace the technology. Vanguard is launching a number of new low-cost personal advice offerings in the US which we may eventually see here.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.