10.13.2011
By Terry Flanagan

ETFs Lead Vanguard Canada

Shortly after the announcement of launching a Canadian arm, buy side titan Vanguard plans to open Canadian business with exchange traded funds.

Vanguard, the Valley Forge, Pennsylvania based asset manager, managing C$1.77 trillion, has planned to begin the Canadian arm’s product launch with exchange traded funds (ETFs).

“The underlying story is the increasing popularity of the low-cost index approach, which is winning converts among investors who traditionally favored individual stocks and actively managed mutual funds,” said Atul Tiwari, managing director of Vanguard Investments Canada.

“Investors are increasingly recognizing the negative impact of high fees on long-term returns. ETFs offer an accessible and flexible way for all constituencies to index.”

Tiwari will spearhead Vanguard’s Canadian business. He was formerly senior vice president at BMO Asset Management.

Vanguard Investments Canada has filed a preliminary prospectus with the Canadian securities regulators for its first series of Canadian-domiciled ETFs. The ETFs span across asset classes.

Vanguard Canada will launch the following fixed income ETF products: the Vanguard Canadian Aggregate Bond Index ETF, which will aim to mirror the performance of the Barclays Capital Global Aggregate Canadian Float Adjusted Bond Index, and the Vanguard Canadian Short-Term Bond Index ETF, aimed to track the Barclays Capital Global Aggregate Canadian Government/Credit 1-5 year Float Adjusted Bond Index.

The equity and macro suite of Canadian ETF launches include: the CAD hedged, Vanguard MSCI U.S. Broad Market Index ETF, which will seek to track the performance of the MSCI U.S. Broad Market CAD index, Vanguard MSCI Canada Index ETF, launched to track the performance of the MSCI Canada Index, the CAD hedged, Vanguard MSCI EAFE Index ETF launched to track the MSCI EAFE 100% hedged to Canadian Dollars Index, and lastly, the Vanguard MSCI Emerging Markets Index ETF, which will seek to track the performance of the MSCI Emerging Markets Index.

Worldwide, Vanguard has $172.3 billion in global ETF assets.

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