Vanguard - one of the world's largest asset managers
Vanguard may be relatively new to Hong Kong but our parent company, The Vanguard Group, Inc., was founded in the United States in 1975 with a commitment to serving our clients' interests exclusively. Over the years, we have held firm to that commitment and have grown to become one of the world's largest asset managers with assets of more than USD 6 trillion1 .
We launched the world's first index mutual fund for individual investors in 1976, beginning the era of low-cost index investing. We have since applied our index management expertise to exchange-traded funds (ETFs), and are now the second largest ETF provider in the world2 .
We offer a wide range of low-cost mutual funds, ETFs, advice and related services to cater to the needs of both our retail and institutional clients. In 1996 we established our first office outside the United States in Australia and later expanded into Japan, Europe, Canada, Mexico, Hong Kong, Beijing and Shanghai.
Vanguard's global reach
Vanguard's mission is to take a stand for all investors, to treat them fairly and to give them the best chance for investment success. As we establish our presence in Asia, we are committed to always putting our clients' interests first. For more information, please contact us.
Notes:
1 Vanguard, as at 30 November 2019.
2 ETFGI, as at 30 November 2019.
Why have clients trusted Vanguard with more than USD 6 trillion*?
Vanguard's mission is to take a stand for all investors, to treat them fairly and to give them the best chance for investment success. But what sets us apart and lets us deliver on that promise?
Vanguard's unique ownership structure aligns our interests with the interests of our clients. The Vanguard Group, Inc. in the US was founded on the simple but revolutionary idea that we should manage the funds we offer in the sole interests of our clients. Unlike other investment management companies, we don't have public shareholders or private owners expecting dividends. We are owned by our US-domiciled funds, which in turn are owned by their investors.
Since Vanguard has no third-party owners, we either reinvest profits into our business or pass them to our fund investors in the form of lower fund costs. We have no conflicting interests and can stay focused on doing what's best for our clients. The most tangible benefit to our clients is low costs, and we are able to offer these low costs due to the Vanguard structure.
With a typical fund management company
With Vanguard
Our enduring low-cost philosophy
In pursuit of higher returns, many investors focus on the latest market and economic news or the past performance of a security or strategy. Meanwhile, they overlook something as simple as how much they pay to invest.
You may be surprised how much an investment's costs can affect its performance over time. The case for low costs is simple: Every dollar you pay in fees directly reduces your net return. All else being equal, lower-cost investments provide greater net returns than higher-cost investments. That advantage becomes more pronounced over time.
Pay less, earn more
Assuming a starting balance of HKD 500,000, and a yearly return of 7%, reinvested annually
Research has shown that a fund's expense ratio is more reliable than past performance and several other metrics in predicting future performance.1 The reason? Cost is one of the few factors affecting performance that you can identify in advance.
At Vanguard, offering low-cost investments isn't a pricing strategy; it's how we do business. Everything we do at Vanguard is designed to give our clients the best chance for investment success. From 1975 to 2017, we reduced the asset-weighted average expense ratio of our US funds by 84%. By year-end 2018, our US funds' asset-weighted average expense ratio was 0.10% – far lower than the industry average of 0.582.
We can keep costs low because of our unique ownership structure in the United States, which allows us to return profits to our funds in the form of lower fees. Unlike other investment management companies, we don't have public shareholders or private owners expecting dividends. We have no conflicting interests and can stay focused on doing what's best for our clients. In fact, as we've entered new markets, other firms have lowered their own fees to compete – which has been called the "Vanguard effect". And as our assets under management increase globally, we can achieve scale and further reduce costs for our clients.
For more information, please contact us.
Notes:
1 Financial Research Corporation, 2002. Predicting Mutual Fund Performance II: After the Bear. Boston: Financial Research Corporation.
2 Vanguard and Morningstar, as at 31 December 2018.
Improving potential returns without adding risk
Almost every investment decision involves a trade-off. The best way to increase potential returns usually involves taking on greater risk. However, more risk also exposes you to greater potential losses.
While all investing involves risk, investors can improve potential returns without adding risk. Perhaps the simplest way is to keep your investing costs low. Lower costs do not necessarily compromise quality; they simply take less of a bite out of your returns. All else being equal, low-cost investments tend to outperform high-cost investments over the long term.
At Vanguard, our ownership structure in the US allows us to use our profits to lower investing costs, which has helped our clients improve their returns – at all levels of risk – for more than four decades.
Although successful investing hinges on many factors, we believe investors should focus on the factors they can control. By adhering to these four enduring principles, investors can give themselves the best chance of success:
- Create clear, appropriate investments goals.
- Develop a suitable asset allocation using broadly diversified funds.
- Minimise cost.
- Maintain perspective and long-term discipline.
These principles guide the decisions we help our clients make. They also guide the way we manage our funds and ETFs. The accompanying chart shows the results we've produced by putting our common-sense principles into practice.
We believe our investing approach can work anywhere. As we expand our presence in Asia, our mission is the same as it is everywhere: to take a stand for all investors, to treat them fairly and to give them the best chance for investment success.
See how our funds have outperformed
(% of all Vanguard funds worldwide that outperformed their peer-group average return for periods ending 31 December 2018)
For more information, please contact us.
