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Vanguard to launch exchange traded funds in Australia


Vanguard Investments Australia has announced it will launch exchange traded funds for Australian investors.

Vanguard Investments Australia has announced it will launch exchange traded funds for Australian investors.

Vanguard entered the US ETF market in 2001 and at the end of 2008, investments in Vanguard’s range of 38 ETFs was more than USD45 billion – an eight per cent increase over the previous year.

Four of Vanguard’s ETFs were among the top 20 best-selling in the industry (US) in 2008.

Ian Alcock, managing director of Vanguard Australia, says: "Vanguard will now be able to offer Australian investors the option of buying indexed based investments through managed funds or ETFs depending on their personal circumstances and preferences."

Vanguard says that with current investment markets experiencing significant volatility and global economies showing signs of recession, the benefits of ETFs and indexing have come to the fore. The liquidity, diversification and flexibility of ETFs have encouraged investors to place more investments into the funds in the past year.

According to the Investment Company Institute, the US fund management industry’s representative body, American investors invested nearly USD200bn into ETFs in 2008. Over the same period equity managed funds suffered withdrawals of USD193bn.

Globally there are more than 1,600 exchange traded funds representing more than USD650bn in assets now available to institutional and individual investors.

Robin Bowerman, Vanguard’s head of retail, says that while ETF take-up in Australia has been muted compared to other markets, Vanguard has decided to enter the market because it believes it will be a growth market in the long term.

"The funds management industry may be going through a period of rationalisation and cutbacks but Vanguard is sticking to its philosophy of investing for the long-term by developing the product and operational capability to deliver ETFs to Australian investors," he says.

"For advisers, our new ETFs will represent an alternative way to access Vanguard’s indexing approach, which can assist in reducing overall costs for clients and manage risks through diversification. They will also offer a flexible option in portfolio construction, with the ability to represent the core or a satellite investment in the portfolio.’

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