Vanguard's 'buy it, set it, forget it' ETF mantra

‘Buy it, set it, forget it’ is the mantra behind Vanguard Investment Canada’s latest foray into the ETF market.

The company launched three asset allocation ETFs on the TSX on February 1 – the Vanguard Conservative ETF Portfolio (VCNS), the Vanguard Balanced ETF Portfolio (VBAL) and the Vanguard Growth ETF Portfolio (VGRO).

The three products have drawn about $200 million in net cash flow combined, charging a management fee of 0.22%. They are designed to be “all-in-one” portfolios and Vanguard head and managing director Atul Tiwari said he was delighted with the response from both retail investors and advisors.

He said: “We’re seeing good take-up from individual investors through discount brokerages. The other one is through advisors. We have a number who are very happy we’ve come up with the product because they are able to use them as a core part of their portfolio, and then around that they can exercise some active stock picking or active training as the satellite. A number have found them to be very useful for the core portion of their books.

“The other part of that is for some of the smaller accounts, advisors find that these are a great diversifying solution at a lower cost for some of those clients to be invested in.

“Personally, I would say they are great for RESPs (Registered Education Savings Plan) for kids. They are a one-ticket solution; you buy it, you set it, you forget it. You don’t have to think about it for 10-15 years.”

The portfolio make-up of each of the three funds differ, with the VCNS 40% equity and 60% fixed income, the VBAL offering 60% equity and 40% fixed income and the VGRO opting for a 80% equity and 20% fixed income make-up.

The company’s portfolio managers regularly rebalance the funds, a selling point Tiwari believes appeals to investors looking for low-cost options.

He said: “We thought looking at the ETF landscape there was an opportunity for us to bring single-ticket solutions to advisors and investors.

“We didn’t really see a low-cost, high-quality offering out there and we felt that to come in at 22 basis points would certainly satisfy the low-cost mandate that we have.

“Also, the high quality of our portfolio managers and investment strategy group who essentially run and monitor these models are a very seasoned and experienced professional group of money managers, so we thought it was a great way to bring all that together with the rebalancing the group does. There was a terrific opportunity there and it was the right time for us to bring the product out.”