Vanguard expands low-cost ETF range
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Samantha Hodge is a journalist with InvestorDaily, a Sterling publication.
Vanguard plans to evolve its range of low-cost exchange-traded funds (ETFs) to give investors easier access to the fixed-income market.
The Australian fixed-interest index ETF will begin trading on the Australian Securities Exchange (ASX) in late October following completion of regulatory approvals.
"Fixed income is an important diversifying component of investors' portfolios - as recent years have shown - serving as a cushion to the volatility associated with equities," Vanguard head of fixed income Stephen Howard said.
"While term deposits can serve well as short-term savings vehicles, investing in high-quality fixed-income assets is all about lowering and managing risk, and ETFs provide investors with an easy, low-cost way to access this asset class," he said.
The ETF offers access to a diverse range of high-credit-quality Australian fixed-income securities at a cost of just 0.20 per cent for a broadly diversified portfolio, which includes allocations to government, semi-government and corporate bonds.
Fixed-income ETFs were permitted for trading on the ASX in early 2012 and already represent 7 per cent of overall ETF investment.
Earlier this year, Vanguard also added the Vanguard Australian Government Bond Index ETF (VGB) to its range.
In other ETF news, the BetaShares Australian High Interest Cash ETF (AAA) has reached $100 million in assets under management approximately seven months after its inception date.
"We are extremely pleased with the awareness of the High Interest Cash ETF within the investor community, especially considering the product was listed just earlier this year," BetaShares head of investment strategy Drew Corbett said.
"The feedback received has been positive and this has been backed up by inflows to the fund."
He explained that while equity markets have been rising in recent months, investor confidence is yet to return, as reflected in many portfolios with continued high cash allocations.
"The High Interest Cash ETF provides a way for investors to obtain rates competitive with at-call bank accounts while still providing flexibility compared with term deposits. The interest in the ETF shows the product fills a gap between the two alternatives," Corbett said.