But, they’re also part of a global trend to reduce mutual fund fees and expense ratios around the world, and he’s hoping to see more of that – given that Vanguard’s fees are “roughly a third of what you’d see in the industry in categories where we compete today.”
Huver attributed that to Vanguard’s structure and history. Its parent company, Vanguard Group, is a mutually-owned company in Canada. Its investors own it, so build economies of scale and reinvest in the business to return lower expense rations to the fund shareholders. It’s also the world’s third largest active manager, so has brought its best managers and flagship funds to Canada.
“Because of our structure and our global scale, we are able to provide these known institutional mangers and mandates at institutional pricing for advisors and retail investors,” said Huver. “That’s really a differentiator for us in the marketplace.”
Vanguard entered the market with its ETFs and passive mutual funds, offering them at lower expenses ratios, and Huver said it has seen competitors move toward lower costs. It’s now taking the same approach with its active funds.
“We think this is really disruptive to the market here in Canada and would expect to see more and more competitors move in this direction as well,” he said. “It’s great for the investors because they keep more of their returns, and that compounds over time and creates a better investment outcome.”
