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Vanguard has revealed that its Canadian line-up of exchange-traded funds (ETFs) has surpassed $1 billion in assets under management.
Atul Tiwari, principal and managing director of Vanguard Investments Canada, said: “We are grateful for the trust that financial advisors and their clients have placed in us.”
Vanguard entered the Canadian market in December 2011, listing six ETFs on the Toronto Stock Exchange (TSX). It added an additional five in November 2012.
Seven more ETFs (five equity funds and two bond funds) are planned, according to a preliminary prospectus recently filed with the Canadian regulatory authorities.
Vanguard attributes the success to the growing acceptance of index investing, citing low costs, broad diversification, relative performance predictability and tax efficiency as key advantages of the approach.
Costs are particularly important. According to Tiwari: “You can’t control market performance, but you can control how much you pay for your investments. All else being equal, investments with consistently low MERs can give you a head start in achieving competitive returns.”
As of December 31, 2012, Vanguard’s Canadian ETFs had an average management expense ratio (MER) of 0.27%. This compares with an average MER of 2.03% for all mutual funds in Canada. Its flagship Canadian product, the Vanguard FTSE Canada Index ETF (VCE), comes with a MER of just 0.11%.
Vanguard also has ETFs listed in the US on the NYSE Arca and Nasdaq Stock Market, and across Europe including on the London Stock Exchange, NYSE Euronext and SIX Swiss Exchange.