Vanguard in Australia – thirteen years on 23 March 2009 In 1996, the Vanguard Group chose Melbourne as the place to open its first office outside the United States. "We were attracted by the growth opportunities offered by Australian's open and competitive superannuation market," said Jack Brennan, Chairman of the Vanguard Group. "We saw Australia as a highly attractive growth market and as a base to drive expansion throughout Asia." Thirteen years on, and Vanguard Investments Australia, wholly-owned by The Vanguard Group, has become Australia's leading index funds manager with over A$60 billion in funds under management. "Vanguard has committed to Australia for the long term," Mr Brennan said. The Group has also chosen Melbourne as its regional hub to serve Asia and its growing numbers of offshore clients. Sophisticated investment market "There were many reasons why Australia was the first overseas market The Vanguard Group decided to tackle," said Jeremy Duffield, Chairman and founder of Vanguard Investments Australia. "The sophisticated investment market, strong growth from changes to superannuation contribution rules, and low barriers to entry, were all attractive." He said that from modest beginnings, the proven low cost, diversified indexed investment approach has come of age in Australia. "Investors in index funds get very competitive returns, lower fees and diversification. In Australia the tax benefit of a buy and hold index strategy has become apparent to clients and their advisers," Mr Duffield said. Index funds in Australia now exceed $185 billion or 15 per cent of the total investment market. Mr Duffield said that Vanguard Investments Australia has been able to build a leading position in the wholesale and retail marketplace by offering a range index funds which cover all major asset classes. He added that the sophistication of the Australian market, availability of a skilled and multi-lingual workforce, and the strategic time zone advantage, had enabled the company to foster growth over the years and to use Melbourne as its Asia Pacific headquarters. Offices in Asia Vanguard Investments Australia now has a number of representative offices in Asia – in Singapore, Tokyo and South Korea – as well as in most major cities in Australia, including Melbourne, Sydney and, more recently, Brisbane and Perth. Managing in excess of A$60 billion in funds for Australian and overseas clients, Vanguard's client base now incorporates institutional and retail direct clients, as well as advisers investing in Vanguard Funds directly and through platforms. "Our working model now differs from our original business plan for the Australian market, where we envisaged building a mainly institutional client base," Mr Duffield said. "But Australian advisers have taken to our low cost, client first approach to managing funds and our focus on education for advisers and their clients." He commented that Australian securities markets have sufficient breadth and liquidity to support a large fund management operation, and are very well supported by international and domestic brokers. Indexing approach Mr Duffield said that Vanguard has seen the benefits of its indexing approach really come to the fore in the current investment climate. "The low cost, diversified long-term benefits ring true for Australian investors who have been battered by the global crisis." He noted that while Australia is not immune to the global financial crisis, the economic strength of the country has meant it has not suffered as badly as many other countries. "Australia is a competitive marketplace and, so far, has weathered the storm better than most. And although unemployment levels have risen, they are still at only five per cent. "One of the reasons why we chose a base here is that Australia has always had strong compliance and financial laws, which protect investors. And the government has worked hard to improve the system; changes have been made for the better in the time we've been here," Mr Duffield said. "The Australian government has gone into this global crisis with many more degrees of freedom than most other countries. Backed by ten consecutive years of surplus and essentially non-existent debt, the government has been able to craft a significant stimulus package and go back to the capital markets without fear. "As for Vanguard, we aim to stay true to our mission and mandate. We don't change our strategy because of day-to-day market moves, and our returns are the market returns. We remain focused on the longer term." More information |