U.S. index fund giant Vanguard Group Inc. plans to launch a new exchange-traded fund with a bargain-basement fee that will rival the SPDR S&P 500 and iShares S&P 500 ETFs listed on the New York Stock Exchange.
The new offering will be the ETF version of its flagship Vanguard 500 Index fund (which is not available to Canadian investors), and comes with a fee of 0.06 per cent compared with 0.09 per cent for its U.S. rivals.
In Canada, the iShares S&P 500 ETF hedged to Canadian dollars charges 0.24 per cent.
Vanguard pioneered index investing for U.S. investors in 1976 with the launch of its Vanguard 500 index fund, which has about $91-billion (U.S.) in assets today. It launched its first ETF in 2001 - the Vanguard Total Stock Market ETF, which has about $14-billion in assets.
The proposed Vanguard S&P 500 ETF is among 19 new index mutual funds and 20 ETFs that are in the works. The index funds will launched alongside their comparable ETFs. Vanguard made the filings Thursday with the U.S. Securities and Exchange Commission, and the products will be available within a year.
"We recognize that institutional investors and financial advisers may have a preference for certain benchmarks, and our goal is to offer them best-in-class funds and ETFs based on a choice of leading index providers, including FTSE, MSCI, Russell and S&P," said Vanguard chief executive officer Bill McNabb.
With ETF fees dropping lower and lower, it may pay to do some cross-border shopping.