Vanguard, the U.S. fund giant, wants to grab a bigger share of the Swiss market and has announced a reduction of the fees it charges for its products.
The annual fee for a Vanguard product in Switzerland will cost an average 0.2 percent per year starting Wednesday, according to the U.S. asset manager. The company cut the price by 8 basis points. Exchange traded funds (ETFs) will cost 0.13 percent per year.
«Price cuts are our daily business,» said Vanguard Europe boss Sean Hagerty in an interview with finews.com. He expects prices of fund products to tend to zero over the longer term.
Huge Potential in Europe
Vanguard is a mutually owned business and as such has less immediate pressure to boost its profits compared with its listed rivals. Vanguard's strategy based on this ownership model helped the company become the second-biggest fund provider on a global stage. It manages about $5.7 trillion.
The company doesn’t expect to be able to boost its U.S. market share of significantly more than 20 percent at above-market growth rates, Hagerty suggested, while in Europe the scope for further growth was huge. The market share in Europe is a low single-digit percentage figure and just below $200 billion in total assets.
Active vs. Passive Management
Low interest rates and high stock market valuations make administration costs for funds all the more important for investors. Hagerty expects expensive, actively managed funds to gradually disappear from the market.
