Vanguard’s new CEO on Canada’s rapid ETF growth and just how low investing costs will go | The Globe and Mail

Despite the differences between the markets in which Vanguard operates, Mr. Buckley’s message as incoming CEO is consistent: He will continue to focus on the Vanguard promise of providing investors with top performing funds at the lowest price possible.

“Maybe competitors don’t realize that we are built to be low cost across the board, but we are,” he says. “Being client owned allows us to continue to drive costs lower and lower. We aren’t paying outside shareholders or paying some private family. When we do well and have excess revenue, we have a choice. We can either take that excess revenue and reinvest in the business, or we can lower expenses.”

In both the U.S and Canadian markets, Vanguard – along with competitor Blackrock Inc., are known for having some of the cheapest investment products on the Street. Together, the fund giants have played a role in driving down the overall cost among its competitors. Since 2011, the average management-expense ratio for an ETF in Canada has dropped to 0.37 per cent from 0.44 per cent, according to research by Morningstar. During that time, Vanguard has slashed its average MER by almost half – down to 0.15 per cent from 0.27 per cent.

So, it may come as a surprise to learn that both Vanguard executives say the company doesn’t pay attention to industry averages or what other firms set as a price point when discussing fees.

“The biggest difference for everybody else in this industry that competes with us is pricing is a strategy,” Mr. Norris says. “For us, pricing is an outcome. If we grow, we will continue to lower the price. It has nothing to do with strategy.”

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Vanguard’s new CEO on Canada’s rapid ETF growth and just how low investing costs will go – The Globe and Mail.