Tuesday, February 23rd, 2010

Simple, broad market ETFs prove popular with Australian investors

Melbourne, 23 February 2010 – Vanguard Investments Australia’s (Vanguard) suite of Exchange Traded Funds (ETFs) has exceeded more than $100 million under management, just 10 months after their launch.

Launched in May 2009, the Vanguard range of ETFs includes: the Vanguard® Australian Shares Index ETF (VAS); the Vanguard® All-World ex-US Shares Index ETF (VEU); and the Vanguard® US Total Market Shares Index ETF (VTS).

ETFs offer investors access to the diversified and low cost characteristics of indexing coupled with the trading flexibility, liquidity and transparency of shares. In fact, for a cost of just 17bps investors can access approximately 93 per cent of the worlds developed and emerging share markets by investing in two Vanguard ETFs.

“ETFs track financial indexes with the added benefit that they can be traded throughout the day just like a share,” said Vanguard ETF Product Manager, Robyn Laidlaw.

“The most pleasing aspect of the uptake of Vanguard ETFs is that it is showing that a growing number of investors and their advisers are appreciating the portfolio benefits of indexing and the flexibility ETFs offer. Our team has been particularly focused on investor education,” she said.

As Vanguard ETF assets have reached $100 million in Australia demand for ETFs continues to grow globally.

New figures from the ASX show that in the year to December 2009, total ETF market capitalisation in Australia grew to $3,080 million – an increase of 185 per cent. This compared to growth of just 10 per cent between December 2007 and December 2008.*

In the US, Vanguard's ETFs have reached around US$91billion (as at 31 December 2009) since they were launched in 2001.

Vanguard is one of three ETF providers with products currently quoted on the ASX. These are three of the biggest global ETF providers, accounting for 87 per cent of total ETF FUM in the US.

In December 2009 global ETF assets surpassed $1 trillion worldwide, with 1,907 ETFs from 103 providers on 39 exchanges around the world.

ETFs that track the broader market have proved most popular, with the majority of the largest 10 ETFs in the US tracking broad market indices.

“In 2009, we saw strong demand from investors - in particular those with SMSFs - who used ETFs to create a core equity allocation within their portfolio. We expect this trend to continue in 2010,” said Ms Laidlaw
*ASX LMI report December 2009.


Contact Profile

Vanguard Investments Australia

About Vanguard ETFs:

The Vanguard Australian Shares Index ETF seeks to match the returns of S&P/ASX 300 which comprises approximately 300 Australian equity securities and represents over 94 per cent of the value of all Australian-based companies and property trusts listed on the ASX.

The Vanguard US Total Market Shares Index ETF seeks to track the performance of the overall U.S. stockmarket using the benchmark MSCI US Broad Market Index which tracks approximately 3900 companies (or 99.5 per cent or more of the total market capitalisation).

The Vanguard All World ex-US Shares Index ETF offers investors approximately 2,200 stocks of companies located in 47 countries by tracking performance of the benchmark FTSE All-World ex-US Index. This index includes both the developed and emerging markets.

Vanguard Investments Australia Ltd is a wholly owned subsidiary of The Vanguard Group, Inc. which is based in the US and currently manages US$1.2 trillion (A$1.4 trillion*) for more than 23 million individual and institutional accounts. In Australia, Vanguard has established a reputation as a specialist indexer, managing over A$80* billion in index funds, for both institutional and retail investors and advisers.
* As at 31 December 2009

Martha Coll
P: +61 3 8888 3870
W: www.vanguard.com.au

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