Ken Cedeno
U.S. investment fund goliath Vanguard Group Inc. has confirmed that it is making a foray into Canada, and will file its offerings with regulators this summer.
While Vanguard, known for its low-fee funds, remains mum about its products, industry sources say it will focus on exchange-traded funds (ETFs) in this country.
Atul Tiwari, a former Bank of Montreal executive who played a key role in the bank's launch of ETFs in June, 2009, will head Vanguard's Canadian operation.
Vanguard plans a big push among fee-only financial advisers, who charge clients a percentage of the assets being managed rather than relying upon commissions. "Vanguard doesn't pay commissions," Mr. Tiwari said.
Vikash Jain, vice-president, portfolio management, with fee-only firm archerETF Portfolio Management in Oakville, Ont., is a big fan of Vanguard's U.S.-listed ETFs and uses them when he can because of their low fees.
But Vanguard will face a challenge making inroads in Canada because most products are sold through commission-based advisers, while "fee-based managers like ourselves are in the minority," he said.
Adrian Mastracci, a fee-only adviser with Vancouver's KCM Wealth Management Inc., expects Vanguard's presence will help put pressure on Canadian ETF and mutual fund fees.
Vanguard will help Canadian investors become more aware of how lower fees benefit portfolio returns, but "it won't set the world on fire immediately," he predicted. "This is not going to be a sprint, but a marathon in the ETF business."
Vanguard will be one of several newcomers to the domestic ETF market. XTF Capital Corp., which launched its first offerings last week, plans on Tuesday to roll out Canada's first convertible bond ETF.