Vanguard pushes into Asia

Vanguard is continuing its push into Asia, with South Korea next in its sights.

Managing director Jeremy Duffield said the fund manager had applied for a South Korean licence and Taiwan was also on the radar screen.

“We are making a concerted push into the Asian market,” he said.

“It makes sense with our expertise in superannuation markets to leverage offshore.”

South Koreans only have 3 per cent of their investments offshore, compared to Australian investors who have 27 per cent.

“We have applied for a licence in South Korea and we will be focusing on Taiwan as well,” Duffield said.

“In Korea we can bring our expertise in overseas investing, which will create opportunities for us.”

However, he has ruled out tackling the largest Asian market — China — at present.

“We have lots of other opportunities before tackling China,” he said.

Currently, Vanguard has offices in Singapore and Tokyo, with Melbourne as its Asian headquarters.

Duffield is also bullish on growing the Australian market in 2007, with the company now having $41 billion of funds under management.

“There is still a low awareness of indexing among investors in Australia, but we have been working with the advisers to show the advantage of indexed funds,” he said.

“We are seeing dealer groups now trying to get costs down for clients, and that means they are using some index funds in portfolios.”

Duffield said while Vanguard doesn’t pay commissions, advisers could get some remuneration from the platform they are using.

“The adviser is also looking for lower risk for their clients, so while they do keep their favourite growth fund, they have been putting money with us,” he said.

“This is reducing the risk of them being bitten by market derivatives, which the growth manager will be using.”

Duffield also said the move to publish after-tax returns for its funds is gaining momentum, with Morningstar also moving to this type of reporting and the Association of Superannuation Funds of Australia making it a priority in 2007.

“After-tax returns reporting is gaining momentum and will accelerate among fund managers next year,” he predicted.