Don’t hold your breath for discount ETFs

Vanguard’s new Canadian arm to focus on adviser-delivered products, at least for now.



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Vanguard Investments has officially entered the Canadian market, but investors waiting for rock-bottom exchange-traded funds (ETFs) may be disappointed, according to an investment expert.

Monday’s announcement of the launch of Vanguard Investments Canada Inc. has been viewed by some analysts as a sign of an impending ETF price war due to Vanguard’s low-cost offerings south of the border. However, asset manager and financial writer Dan Hallet has poured cold water on such hopes, noting that the company’s press release reveals little in terms of product information and says nothing about ETFs.

Vanguard’s first round of products will be delivered only through investment advisors. Hallet suspects that the firm will target a specific segment of the Canadian mutual fund market — which is notorious for its high fees — and leave the competitive ETF and index fund markets for a later date.

Until Vanguard releases a preliminary prospectus, it appears that index fund and ETF investors will have to wait.

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