Recently, I read the world’s largest mutual fund company, Vangaurd Group Inc., is finally making the move north to Canada. In my opinion, this is great news for the do-it-yourself (DIY) investor.
While Canadians have for some time, been able to take advantage of ultra-low-cost ETFs offered by Vanguard through currency conversion transactions, I believe Vanguard’s move north of the 49th will trigger a whole new set of offerings in Canadian funds and offer much more competition for indexed investment space. This can only mean good news for you and I. Management expense fees for Vanguard products are, in some cases, 50% lower than competitors’ products who have already set-up shop in Canada. Moreso, if you’re paying your mutual fund manager some heafty fees to beat the index, I hope your mutual fund returns see evidence of that because if not, you could be paying 10 times the fees Vanguard charges. Instead of you or your mutual fund manager trying to beat the index, I think most mere mortals (I put myself in that category) are better off using the lowest-cost broad-market index product for their portfolios. Your indexed funds or ETFs will never beat the index but then again, they’ll never lag it by much either.
As industry pioneers, I am curious to see the menu Vanguard will offer Canadian investors and the value they might provide over existing ETF players later this year. When I find more news about this, I’ll be sure to post it on my blog, offering my own perspectives for what has been launched and also an overview of my Vanguard transactions if I make any.
Remember friends, when it comes to investing, fees are forever 🙂
What do you make of this news?
Will you be a buyer of Vanguard products when they come to Canada?