Vanguard ETF
Vanguard ETF’s – Pros and cons
Being the number 2 ETF provider in the world Vanguard has a proven track record of issuing ETF’s that appeal to customers worldwide. Here we will single out some characteristics of Vanguard ETF’s and we will discuss some pros and cons of Vanguard ETF’s.
The pros of Vanguard ETF’s
Since the start of Vanguard in 1975 they have always been very investor-orientated. This goes back to the reverse ownership of the mutual funds they “managed” (passively that is) in the 70’s, 80’s and 90’s where investors became the ultimate owners of the funds instead of a third party owner that also had to be paid a dividend.
The same goes for their cost-cutting approach to investing. This attitude helped Vanguard to gain steady ground in the ETF market in a very rapid and convincing way. Let’s discuss the biggest advantages of Vanguard ETF’s right here:
1. Low ETF fees and expense ratios from Vanguard
Vanguard has always had its mind focused on cutting costs. That was (and is) true for its mutual funds but it is also true with the ETF’s they provide. In most cases Vanguard wins the race to the bottom concerning costs and fees compared to other ETF issuers, a strong advantage it offers to its customers!
2. A large variety of ETF’s on offer
Vanguard is not a niche player, it offers ETF’s in a wide variety of markets, indices, markets and commodities. That does not mean that they all are the best choice in picking a particular market or region but it must be said, in most cases Vanguard offers ETF’s that are well-balanced in underlying assets.
3. Vanguard only offers physical ETF’s
As for now (time will tell if this remains the case) Vanguard offers only physical ETF’s. With physical ETF’s investors are assured that the issuer, Vanguard, is holding the underlying assets. This is the best way of ensuring a 100% right tracking and it puts off the risk that is associated with synthetic ETF’s that use other financial products for tracking (such as swaps).
4. Real experts in indexing
For more than 40 years Vanguard has built up experience in indexing, first with their very innovative First Index Investment Fund established in 1975 and now with ETF’s where the key issue is to closely follow the underlying assets. No other investment firm like Vanguard can boast such an experience.
5. Many brokers to work with
Vanguard has close relations with many brokers worldwide. Getting access to Vanguard ETF’s therefore is no problem at all. You may still trade through your own preferred broker in buying and selling Vanguard ETF’s.
Are there any cons in trading Vanguard ETF’s?
To be honest there are not many. But sometimes they do not provide the best ETF in a given market sector. This goes for all ETF’s providers, that is why I have picked only 137 ETF’s I follow due to a long study of all existing ETF’s in a certain region or market.
1. I prefer other ETF’s for some important geographical ETF’s
Especially in regional ETF’s I prefer other ETF providers than Vanguard. Let’s take Latin America as an example. Here other providers do offer a wide range of high volume ETF’s while Vanguard is more focused on their mutual funds that are active in this region. This also goes for other regions.
2. Not focused on specific countries
Just as stated above about important geographical regions one can also make the same conclusion about some countries. Take the example of China where other ETF providers offer the best package with balanced underlying assets.
Final verdict of Vanguard ETF’s
I love the way Vanguard is treating customers. Their mindset is 100% investor/customer focused. They understand that an efficient management and cutting costs is good for customers and business.
I really think that the total running costs of ETF’s would be much higher without Vanguard being around watching for every cost advantage they can return to their customers. Vanguard offers a wide range of ETF’s that appeal to many investors. That being said there is ample room in adding new ones.
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