Atul Tiwari, Managing Director and Head of Vanguard Investments Canada, discusses the outcome of Vanguard's foray seven years ago, and its instrumental role in the lowering of management costs across the ETF and mutual fund industry.
We talked to Atul Tiwari at the inaugural Inside ETFs Canada Conference in Montreal.
"In the ETF space, when we started, our average MER was somewhere around 27 bps, now it's 15 bps, so we pretty much halved it over seven years from a pretty low base to begin with," says Tiwari. "I would say, in terms of, was there fear, I don't know if there was fear amongst the other providers, but that's really where the competition is. It's the price of the ETF, so from advisors, we didn't get any push back whatsoever."
"One of the trends that we see, in most of the markets that we operate, whether its as a result of regulation, or competition, has been the move to fee-based by advisors, and that's something Vanguard supports, because we believe that it provides the greatest fee transparency for investors, and it happens to actually then work well with our model of a low-cost investment product," says Tiwari.
"The advisor can charge a fee at the account level, and then, because they're charging a fee here, essentially they're incented to use the lowest cost product in their portfolios, to get the best returns for their clients. We feel like it's a win-win-win."
Vanguard has recently launched a series of new actively managed ETFs, as well as, surprisingly, a new series of mutual funds.
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