Could Vanguard Take its Show on the Road?

Vanguard’s CEO, Tim Buckley, is being urged to take Vanguard’s low cost model into more foreign markets. You probably haven’t had the time to research the investment options available to foreigners, but in short they tend to be expensive and narrow. That’s just the kind of market that screams for the low cost model Vanguard brings to its customers. FT’s Chris Flood writes of Buckley:

In May, Vanguard announced it would sell its funds directly to UK retail clients in a move that will intensify the competitive pressures facing rival asset managers. Liberum, the brokerage, predicted that a quarter of the new cash invested annually by UK retail clients could flow to Vanguard’s platform in the next three years.

The move immediately raised questions about whether Vanguard would replicate this strategy elsewhere in Europe, where its physical presence remains small.

Jim Norris, head of Vanguard’s international business, says the expansion of non-US operations has been “deliberate rather than slow”, as the company’s ambitions are part of a multi-decade strategy. He recognises, however, that there is more Vanguard could do to draw retail investors across Europe into its funds.

“ETFs are an area where we can do a lot more. Most ETF investors outside of the US are institutions. We don’t see any reason why individual retail investors will not be more significant buyers of ETFs over the next 20 years,” he says. “We are just scratching the surface in the UK. Our offering will develop and evolve. There is much more we can do in the defined contribution pensions space.”

In Germany, where Vanguard has historically lacked any real presence, plans are under way to open an office as a base for Sebastian Külps, who was hired in February as head of business development for the country.

The introduction of European rules in 2018 that will ban asset managers from paying commissions to financial advisers in return for product recommendations will additionally “open up new opportunities for Vanguard’s way of investing”, says Mr Norris.

Vanguard is also stepping up its activities in Latin America with the opening of an office in Mexico planned for next year. It already has 65 ETFs listed on the Mexican stock exchange.

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.