About Vanguard - Vanguard Canada

About Vanguard
Why do we exist?
To take a stand for
all investors, to treat
them fairly, and to give
them the best chance
for investment success.
Vanguard at a glance
Vanguard was founded in Valley Forge, Pennsylvania, in 1975 on a simple but
revolutionary idea—that an investment company should manage the funds
it offers in the sole interest of its clients. Today, the Vanguard organization
worldwide manages $4.1 trillion in assets through our 19 office locations. We
offer 159 funds in the United States, and 123 funds outside the United States
including 23 ETFs through our Canadian subsidiary, Vanguard Investments
Canada Inc. Vanguard serves more than 20 million investors worldwide.
Se
14,000
282
Number of crew
members worldwide
Number of
Vanguard funds,
globally
Calgary
Vancouver
Toronto
Montreal
London
Paris
Amsterdam
Zurich
Valley Forge
Scottsdale
Beijing
Tokyo
Charlotte
Hong Kong
Singapore
$4.1trillion
Global assets
under management
20million
Number of
Vanguard investors
Brisbane
Perth
Melbourne
Source: Vanguard. Data as of March 31, 2015.
Sydney
vic
r
e
Who we serve
11
0
2 through a variety of channels,
Vanguard serves investors around the
nworld
i
including directly, through advisors
rs and through company retirements plans.
u
o
h
r
e
e
t
n
lu
o
v
Financial advisors (U.S.)
am
r
g
Vanguard offers products, programs, and
o
r
services that help advisors serve their
ep
clients and grow their business.
Institutions (U.S.)
32%
Thousands of corporations, institutions,
24%
retirement plans, and consultants rely on
Vanguard to manage their assets and help
$4.1 trillion
keep their investment programs on track.
Assets under management
Global investors (non-U.S.)
8%
36%
Investors and financial advisors in Canada
and around the world benefit from
Vanguard’s low costs, client focus,
and time-tested investment philosophy.
Individuals (U.S.)
Millions of individuals come to Vanguard on
their own to help reach investment goals
and build long-term wealth.
d
ce
n
la
ba
m
ter
t
r
o
Source: Vanguard. Data as of March 31, 2015.
sh
Why costs matter
Investors can’t control the markets, but they can control the costs of
investing. Providing low-cost investments isn’t a pricing strategy for us. It’s
how we do business. Vanguard’s scale also helps to keep costs low. As our
assets under management increase globally, we can reduce expense ratios
for the investors in our funds.
Average Canada MERs, 2012–2014
2.25%
2.12%
2.25%
2.12%
1.50
0.75
Average U.S. expense ratios, 1984-2014
1.5%
1.02%
U.S. fund
industry
1.0
0.81%
0.27%
0.80%
0.24%
0.79%
0.5
0.18%
Vanguard
U.S.-domiciled funds
0.22%
0
0
Dec 2012
Dec 2013
Dec 2014
1984
Vanguard Canada-domiciled ETFs
1994
2004
2014
Vanguard U.S.-domiciled mutual funds
U.S. mutual fund industry
Canada ETF industry
Canada mutual fund industry
Sources:
expense 2.25%
ratios (MERs) are straight-average
2.25% The management
2.12%
2.12%
MERs as of December 31 of the calendar year shown using data
compiled from management reports of fund performance. The Canada
ETF and mutual fund industry MERs were calculated by Investor
1.50
Economics. The mutual fund industry average MER calculations include
load and no load series A, T and advisor series mutual funds and exclude
ETFs, funds with0.81%
performance fees, money market funds, funds with
0.80%
0.79%
0.75
management fees charged at account level, hedge funds, index funds
and LSVCC funds. Without waivers and absorptions, the Vanguard
0.27%ETF average0.24%
0.22%
Canada-domiciled
MERs would have
been higher. Vanguard
Investments
Canada Inc. expects to continue absorbing or waiving
0
certain fees indefinitely but may, in its discretion, discontinue this
Dec 2012
Dec 2013
Dec 2014
practice at any time.
Vanguard ETFs1
Canada ETF industry 2
Canada mutual fund industry 3
Sources: Industry data provided by Weisenberger Panorama for 1975-1977,
1.5%
and Lipper, a Thomson Reuters Company thereafter. Vanguard expense
ratios were sourced internally.
1.0
0.5
0
1994
1984
Vanguard
Industry
2004
2014
Vanguard is different from the rest—
and here’s how our investors benefit.
Clients
Investment
company
Private owner/
stockholders
Clients
U.S.-domiciled
The Vanguard Group, Inc.
Clients
Canada-domiciled
Vanguard Investments Canada Inc.*
Economies
of scale
Global
reach
* Vanguard Investments Canada Inc. is a wholly-owned indirect subsidiary of The Vanguard Group, Inc.
Why does ownership matter?
All mutual funds are owned by their unitholders—but the unitholders typically don’t own the
companies that manage the funds. Instead, nearly all investment management companies are
owned by third parties—either stockholders, in the case of publicly traded firms, or private
interests. Of course, these owners expect to make a profit from their enterprise. Predictably,
this arrangement can lead to conflicts of interest. What’s best for fund unitholders isn’t
necessarily what’s best for the management companies’ owners.
Vanguard is a very different kind of investment firm—founded on the simple but revolutionary
idea that a mutual fund management company should be managed in the sole interest of its
funds’ investors. Rather than being publicly traded or owned by a small group of individuals,
The Vanguard Group, Inc., is owned by its U.S.-domiciled funds and ETFs. Those funds, in
turn, are owned by their investors.
This unique mutual structure aligns our interests with those of our investors and drives
the culture, philosophy and policies throughout the Vanguard organization worldwide.
As a result, Canadian investors benefit from Vanguard’s low costs, client focus,
stability and experience.
$1,800B
$1,541B
1,200
$699B
600
Recent efforts to reach investors
0
2007
2015
Vanguard RIG AUM
Vanguard HNW AUM
$400B
$320B
In the years since the global financial crisis,300
Vanguard has set upon a strategy
$1,600B
$1,400B
to broaden and deepen relationships with investors across a wide range of
1,200
200
800
100
funds and services.
$107B
$554B
$261B
400
0
$41B asset growth…
Vanguard
2007
2014
0
2015
2007
among
U.S. advisor-served clients
$1,200B
Vanguard U.S. Financial Advisor Services
$1,600B
Vanguard U.S.-domiciled ETFs
Vanguard International AUM
among U.S. retirement investors
$1,400B
$920B
900
$1,600B
1,200
$1,800B
$1,400B
$1,541B
800
$554B
1,200
400
600
600
1,200
$308B
300
800
$261B
$699B
$41B
$19B
0
2015
2007
0
400
$278B
$554B
$261B
2007
2015
$41B
Vanguard U.S. Financial Advisor Services
0
Vanguard U.S.-domiciled ETFs
2007
Vanguard U.S. defined contribution plans
0
2007
2015
Vanguard U.S. Financial Advisor Services
Vanguard RIG AUM
$1,800B
Vanguard HNW AUM
among non-U.S. clients
Vanguard U.S.-domiciled Target Retirement Funds
2015
$1,541B
$400B
1,200
Vanguard U.S.-domiciled ETFs
among U.S. retail clients
$1,800B
$1,541B
$320B
$699B
300
1,200
600
200
100
$699B
0
$107B
2007
600
2015
Vanguard RIG AUM
0
2007
Vanguard HNW AUM
0
2014
Source:
Vanguard. Vanguard
Data as of International
March 31, 2015.AUM
$400B
$1,200B
2007
2015
Vanguard RIG AUM
$320B
Vanguard HNW AUM
Vanguard investor trends...
In 2014, Vanguard’s $251B in U.S. net cash flow represented 55% of U.S. industry inflows.
Vanguard’s U.S. net cash flow by asset class
Vanguard U.S. net cash flow vs. U.S. industry
Equity
Vanguard
Bond
Rest of industry
Money Market
$88B
$88B
$251B
$165B
$165B
2007 2014
2014
$209B
2007
20072014
Source: Vanguard.
Source: Vanguard and Strategic Insight (SI), an Asset International company.
Vanguard global AUM, index and active
ETF cash flow leaders in Canada
Vanguard’s TSX-listed ETFs have ranked among
the industry leaders in net cash flow over the past
three years.
30%
Index
70%
Source: Vanguard. Data as of March 31, 2015.
Active
balanced
Net cash flow
($M)
Rank
Manager
1
BMO Investments
14,007
2
Vanguard Canada
3,952
3
BlackRock Canada
3,141
4
Invesco
1,645
5
Horizons ETFs
1,600
short term reserves
bond
Vanguard Canada-domiciled ETFs
equity
balanced
short term reserves
$1,324M
bond
Equity
Bond
equity
$3,367M
Source: Vanguard. Data as of March 31, 2015.
Source: Investor Economics. Shows total ETF net cash flow of firms that
offered ETFs throughout the full three-year period ending March 31, 2015.
Our investment philosophy
Successful investment management companies base their business on a core
investment philosophy, and Vanguard is no different. Our philosophy is simple,
enduring, and based on four key principles.
Create clear, appropriate investment goals.
Goals
An appropriate investment goal should be measurable
and attainable. Success should not depend upon outsize
investment returns, nor upon impractical saving or spending
requirements.
Develop a suitable asset allocation using
broadly diversified funds.
Balance
A sound investment strategy starts with an asset allocation
suitable for the portfolio’s objective. The allocation should be built
upon reasonable expectations for risk and returns, and should use
diversified investments to avoid exposure to unnecessary risks.
Minimize cost.
Cost
Markets are unpredictable. Costs are forever. The lower your
costs, the greater your share of an investment’s return. And
research suggests that lower-cost investments have tended
to outperform higher-cost alternatives.
Maintain perspective and long-term discipline.
Discipline
Discipline and perspective are the qualities that can help
investors remain committed to their long-term investment
programs through periods of market uncertainty.
Vanguard as an innovator
Vanguard has been a pioneer in the fund industry since our founding in in the
United States in 1975. We continue to look for new ways to reduce the cost and
complexity of investing.
1975
Client ownership in the United States
1976
First index mutual fund in the United States
1977
No load: First “virtual” mutual fund company in the United States
1995
Vanguard.com, a truly virtual operation in the United States
2001
Vanguard ETFs in the United States: Unique share-class structure
2011
Vanguard ETFs in Canada: A price disruption
2014
First all world ex Canada ETF
Vanguard Investments Canada Inc.
Bay Adelaide Centre
22 Adelaide Street West
Suite #2500
Toronto, ON M5H 4E3
Connect with Vanguard®
vanguardcanada.ca
888-293-6728
Commissions, management fees, and expenses all may
be associated with investments in a Vanguard ETF ®.
Investment objectives, risks, fees, expenses, and other
important information are contained in the prospectus;
please read it before investing. ETFs are not guaranteed,
their values change frequently, and past performance may
not be repeated. Vanguard ETFs are managed by Vanguard
Investments Canada Inc., an indirect wholly-owned
subsidiary of The Vanguard Group, Inc. and are available
across Canada through registered dealers.
First date of publication: October 2015.
This material is for informational purposes only. This material is
not intended to be relied upon as research, investment, or tax
advice and is not an implied or express recommendation, offer or
solicitation to buy or sell any security or to adopt any particular
investment or portfolio strategy. Any views and opinions expressed
do not take into account the particular investment objectives,
needs, restrictions and circumstances of a specific investor and,
thus, should not be used as the basis of any specific investment
recommendation. Investors should consult a financial and/or tax
advisor for financial and/or tax information applicable to their
specific situation.
While this information has been compiled from proprietary and
non-proprietary sources believed to be reliable, no representation or
warranty, express or implied, is made by The Vanguard Group, Inc.,
its subsidiaries or affiliates, or any other person (collectively, “The
Vanguard Group”) as to its accuracy, completeness, timeliness or
reliability. The Vanguard Group takes no responsibility for any errors
and omissions contained herein and accepts no liability whatsoever
for any loss arising from any use of, or reliance on, this material.
Information, figures and charts are summarized for illustrative
purposes only and are subject to change without notice.
In this material, references to “Vanguard” are provided for
convenience only and may refer to, where applicable, only The
Vanguard Group, Inc., and/or may include its affiliates, including
Vanguard Investments Canada Inc.
All investments, including those that seek to track indexes,
are subject to risk, including the possible loss of principal.
Diversification does not ensure a profit or protect against a loss
in a declining market. While ETFs are designed to be as diversified
as the original indexes they seek to track and can provide
greater diversification than an individual investor may achieve
independently, any given ETF may not be a diversified investment.
© 2016 Vanguard Investments Canada Inc.
All rights reserved.
ABTVAN 042016