One Year In, How Do Vanguard's ETFs Measure Up?

For UK and US equity exposure, Vanguard's ETFs have the edge in terms of tracking difference, while iShares' ETFs offer the tightest trading spreads

Alastair Kellett 18 June, 2013 | 6:15PM
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We’ve now passed the 1-year mark since Vanguard, a fund behemoth in the US, launched its European ETF business with products linked to the FTSE 100, the FTSE All-World, the FTSE Emerging Markets, the S&P 500 and a Barclays global government bond index

The Vanguard FTSE 100 ETF (VUKE) and Vanguard S&P 500 ETF (VUSD) are by some margin the biggest of that group, with assets of roughly £230 million and £400 million, respectively, at the time of writing. They are also competing with a host of other European-domiciled ETFs that track the same indices. So one year in, how do Vanguard's contributions to the European landscape measure up against their more established peers? 

The most noticeable points of comparison are the funds' total expense ratios (TERs). Vanguard is structured as a mutual company wherein the management firm is owned by the investors in its funds. That has traditionally allowed it to offer funds with extremely low fees, since any fee income is designed to profit the unitholders anyway, not a separate constituency that might argue for higher margins from the customer. To wit, Vanguard FTSE 100's TER of 0.10% is the lowest among the group of European-domiciled ETFs tracking that index, where the rest range from 0.25% to 0.40% (see figure 1). Its S&P 500 ETF has a TER of 9 basis points. That’s the same as HSBC S&P 500, although it isn’t the lowest in the group, a distinction that belongs to UBS ETFs plc S&P 500, which sports a TER of 0.05% (see figure 2). 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
HSBC S&P 500 ETF45.89 USD0.23
iShares Core FTSE 100 ETF GBP Dist707.08 GBX0.28
iShares Core S&P 500 ETF USD Dist45.31 USD0.35
iShares FTSE 100 ETF GBP Acc125.20 GBP-0.05
Vanguard FTSE 100 UCITS ETF31.63 GBP0.29
Vanguard FTSE All-World UCITS ETF122.03 USD0.30
Vanguard FTSE Emerg Markets ETF $Dis70.09 USD0.63
Vanguard S&P 500 UCITS ETF86.27 USD0.31
Vanguard UK Gilt UCITS ETF23.63 GBP0.01Rating

About Author

Alastair Kellett

Alastair Kellett  is an ETF analyst with Morningstar Europe.