Toronto-based Vanguard Investments Canada Inc. is targeting financial advisors with a mutual fund licence with the introduction of its first suite of actively managed, globally diversified and low-cost mutual funds in Canada on Monday.
The mutual funds feature global investment strategies from some of Vanguard’s longest-tenured subadvisors and complement the firm’s lineup of 36 ETFs, which have more than $16 billion in assets under management (AUM). (Canadians hold more than $28 billion in Vanguard investments, including both Canadian and U.S. funds.)
“Vanguard has a deep 40-year history of active management expertise and we are excited to extend that to mutual fund investors in Canada, at a low cost,” said Atul Tiwari, managing director of Vanguard Canada, in a statement. “These mutual funds reflect our philosophy as an organization with a disciplined long-term approach and world-class investment managers that have worked with Vanguard for decades.”
Globally, Pennsylvania-based parent firm Vanguard Group Inc. has more than US$5 trillion in assets under management (AUM) and is one of the world’s largest active managers with US$1.2 trillion in global actively managed assets under management.
“The contributing factors to successful active management are low costs, talent and patience,” said Tim Huver, head of product, Vanguard Canada, in a statement. “These mutual funds provide Canadians with access to proven global investment strategies in an innovative fee structure that aligns with the best interests of investors.”
Vanguard will use a unique pricing structure in the Canadian marketplace that aligns the interests of the subadvisors with the funds’ investors. The maximum management fee for each mutual fund will be 0.50% and the management fee will vary up or down, up to that maximum amount, based on the investment performance of each fund.
“As a group, Canadians hold about $1.5 trillion in mutual fund assets,” added Tiwari. “Vanguard has a long track record of lowering investment costs in the areas in which we operate, so we see providing greater choice and lower costs to a broader group of investors as very positive.”
Vanguard’s suite of four mutual funds includes:
> Vanguard Global Balanced Fund seeks to provide long-term capital growth and some current income by investing primarily in a combination of equities and fixed-income securities of issuers located anywhere in the world. This fund will be subadvised by Wellington Management Canada ULC (and Wellington Management Com. LLP, as a subadvisor to Wellington Management Canada ULC). It has a first-year management fee of 0.38%.
> Vanguard Global Dividend Fund aims to provide an above-average level of current income along with long-term capital growth by investing primarily in dividend-paying equities of companies located anywhere around the world. This fund also will be subadvised by Wellington Management Canada (and Wellington Management Co. LLP, as a subadvisor to Wellington Management Canada) and the Vanguard Group. It has a first-year management fee of 0.34%
> Vanguard Windsor U.S. Value Fund intends to provide long-term capital appreciation and income by investing primarily in large- and mid-capitalization companies located in the U.S., the stocks of which are considered undervalued. This fund will be subadvised by Wellington Management Canada (and Wellington Management Co., as a subadvisor to Wellington Management Canada) and Pzena Investment Management LLC. It has a first-year management fee of 0.35%
> Vanguard International Growth Fund seeks to provide long-term capital appreciation by investing primarily in the stocks of companies located outside Canada and the U.S.. This fund will be subadvised by Baillie Gifford Overseas Ltd. and Schroder Investment Management North America Inc. It has a first-year management fee of 0.40%
The first-year management fee for these four mutual funds above is effective from June 25 to June 30, 2019. The funds will be available to advisors through Series F units.