Product adviser: Vanguard expands ETF range with European equity product

The Vanguard Euro STOXX 50 Ucits ETF fund is listed on the London Stock Exchange (LSE) and Deutsche Börse.

The company said that, through the fund, investors will be able to access multi-national European firms in the eurozone across a diverse range of industries and sectors.

Vanguard now offers 23 ETFs listed on the LSE. It also has more than $150bn in assets under management across its European mutual fund and ETF range.

The firm is continuing to expand its range of passive products, which in turn are growing in popularity among the adviser community. Its flagship UK FTSE 100 tracker now has close to £2.7bn in assets under management.

At the time same, the provider is engaged in a price war with fellow ETF providers. Vanguard, BlackRock’s iShares brand, Fidelity and Legal & General Investment Management (LGIM) have all cut charges. The Vanguard FTSE ETF has an ongoing charges figure of 0.09 per cent.

Vanguard’s eye for domination does not stop there, however. 

It has recently taken on the advisory space, launching a direct-to-consumer platform, offering its low-fee ETF products with a minimal platform charge.

Provider view

Robyn Laidlaw, UK head of distribution at Vanguard Asset Management, said: “We continue to expand our range of ETFs in the UK and Europe, always with the aim of meeting the evolving needs of investors. The Vanguard EuroSTOXX 50 Ucits ETF provides investors with transparent and liquid access to successful companies,at a low fee.” 

Adviser view

Andrew Wilson, director and co-founder of Lockhart Capital Management, said: “Overall, this launch is a positive development, giving low-cost and efficient access to mega-cap eurozone stocks. It remains to be seen what the take-up will be, and hence the liquidity, spreads and dealing costs, which always should be assessed alongside the basic management charge. Investors need to be aware that it is quite a concentrated option, holding just 50 positions and with the majority being listed in France and Germany. 

“Being outside  the US and Asia, there is a commensurate drop in technology exposure, for better or for worse, at comfortably less than 10 per cent of the underlying index. Instead one is majoring on financials and consumer stocks, although otherwise the sector spread and diversification is not too bad.”

Charges

Ongoing charges figure (OCF) of 0.10 per cent.

Verdict

Most asset allocators are nearing full weight European equities, so now might not be an obvious time from a valuation perspective to be topping up further. That said, there is always the ongoing active to passive story and at these costs, some might switch, particularly if they are already content with other Vanguard offerings. However, European equities is a stronger region for active managers.