The Vanguard difference

Transcription

1 The Vanguard difference Vanguard Investments Canada Inc.

2 Vanguard s product constitution 1. Vanguard s product lineup will focus on the enduring needs of investors. 2. Vanguard will offer products that: Address enduring investment goals and are easily understood, Give investors the best chance for investment success, Strive to be best-in-class relative to other products in the marketplace (e.g., low price, low index-tracking error), Cannot harm a reasonable investor by being too narrow, too concentrated, or too illiquid 3. Vanguard will consider client input while ensuring that our product lineup reflects our investment philosophy. 4. Vanguard will evaluate the success of our products only after the passage of a reasonable amount of time, but will then move judiciously to address failures. 2

3 Vanguard s product playbook TIER IV Specialty Specialized, often more complex, products: Rules-based factor exposures, such as dividend-oriented and minimum volatility. TIER III Single-fund solutions and active equity Hybrid products: Balanced single-fund solutions, such as target-date funds, target-risk funds, and managed-payout funds. Traditional long-only active equity funds. TIER II TIER I Beta building blocks Core betas Diversified mandates or legitimate local investor product preferences: Regional and sector mandates. Size/style/maturity-based mandates. Broadest mandates and most important local investor product preferences: Local total stock and total bond funds. Global stock and global bond funds. Ex-local total stock and total bond funds. 3

4 Low-cost, broadly diversified solutions in every asset class Vanguard ETFs Broad Canadian equity VCN - FTSE Canada All Cap Index ETF Broad U.S. equity VUN - U.S. Total Market Index ETF Broad Canadian fixed income VAB - Canadian Aggregate Bond Index ETF Broad Canadian real estate VRE - FTSE Canadian Capped REIT Index ETF Management fee 0.12% Holdings 246 Index correlations Management fee 0.15% Holdings 3,629 Index correlations Management fees 0.20% Holdings 411 Index correlations Management fee 0.35% Holdings 19 Index correlations Vanguard s asset-weighted management fee 0.19% Sources: Vanguard analysis of correlations based on data from Morningstar, Barclays and FTSE as of February 28, Management fees are from Semi-annual Management Reports of Fund Performance as of June 30, 2013, as filed on SEDAR. 1 3-year correlation based on monthly S&P/TSX Capped Composite Index and FTSE Canada All Cap Index returns from Morningstar, as of February 28, year correlation based on monthly S&P 500 Index (CAD) and CRSP US Total Market Index (CAD) returns from Morningstar, as of February 28, year correlation based on monthly DEX Universe Index returns from Morningstar and Barclays Global Aggregate Canadian Float Adjusted Bond Index from Barclays, as of February 28, year correlation based on monthly S&P/TSX Capped REIT Index returns from Morningstar and FTSE Canada All Cap Real Estate Capped 25% Index from FTSE, as of February 28,

5 Strategic model ETF portfolio Balanced portfolio sample using Vanguard ETFs Asset allocation Canada home bias Equity 60% 30% Fixed income 40% 100% PORTFOLIO DETAILS ETF Ticker Allocation 1 fee (bps) Management Holdings Equity FTSE Canada All Cap Index ETF VCN 18% CRSP U.S. Broad Market Index ETF FTSE Developed ex-north America Index ETF VUN / VUS VDU / VEF 21% 15 3,629 17% 28 1,302 FTSE Emerging Index ETF VEE 4% Fixed income Canadian Aggregate Bond Index ETF VAB 40% Total ,506 Source: The Vanguard Group, Inc. Holdings based on Vanguard data as of February 28, Equity allocations based on FTSE Global All Cap Index data as of December 31, 2013, rounded to the nearest 1%; analysis by Vanguard Investments Canada, Inc. 2 Total management fee is asset-weighted. 5

6 Vanguard ETFs : Equity Vanguard Investments Canada Inc. offers Canadian investors 13 low-cost equity ETFs Ticker Vanguard ETF Benchmark index Management fee Management Expense Ratio (MER)* VCE FTSE Canada Index ETF FTSE Canada Index 0.09% 0.10% 78 VCN FTSE Canada All Cap Index ETF FTSE Canada All Cap Index 0.12% 246 VDY FTSE Canadian High Dividend Yield Index ETF Holdings FTSE Canada High Dividend Yield Index 0.30% 0.34% 79 VRE FTSE Canadian Capped REIT Index ETF FTSE Canada All Cap Real Estate Capped 25% Index 0.35% 0.39% 19 VUS U.S. Total Market Index ETF (CAD-hedged) CRSP US Total Market Index (CAD-hedged) 0.15% 0.16% 3,629 VUN U.S. Total Market Index ETF CRSP US Total Market Index 0.15% 3,629 VSP S&P 500 Index ETF (CAD-hedged) S&P 500 Index (CAD-Hedged) 0.15% 0.17% 502 VFV S&P 500 Index ETF S&P 500 Index 0.15% 0.17% 502 VGH U.S. Dividend Appreciation Index ETF (CAD-hedged) NASDAQ U.S. Dividend Achievers Select Index (CADhedged) 0.28% 146 VGG U.S. Dividend Appreciation Index ETF NASDAQ U.S. Dividend Achievers Select Index 0.28% 146 VEF FTSE Developed ex North America Index ETF (CAD-hedged) FTSE Developed ex North America Hedged CAD Index 0.28%** 1,302 VDU FTSE Developed ex North America Index ETF FTSE Developed ex North America Index 0.28% 1,302 VEE FTSE Emerging Markets Index ETF FTSE Emerging Index 0.33%** 918 Source: The Vanguard Group, Inc. Holdings based on Vanguard data as of February 28, * MERs are as of June 30, 2013 and are based upon actual annualized expenses including waivers and absorptions. MERs without any absorptions or waivers would have been: 0.11% for VCE, 0.44% for VRE, 0.37% for VDY, 0.53% for VEE, 0.40% for VEF, 0.17% for VUS, 0.17% for VFV and 0.22% for VSP. The Manager expects to continue absorbing or waiving certain fees indefinitely, but may in its discretion, discontinue this practice at any time. ** As of July 24, 2013, the management fee for VEF was reduced from 0.37% to 0.28% and as of August 12, 2013, the management fee for VEE was reduced from 0.49% to 0.33%. 6

7 Vanguard ETFs : Bonds and three low-cost bond ETFs Ticker Vanguard ETF Benchmark index Management fee VAB VSB VSC Canadian Aggregate Bond Index ETF Canadian Short-Term Bond Index ETF Canadian Short-Term Corporate Bond Index ETF Barclays Global Aggregate Canadian Float Adjusted Bond Index Barclays Global Aggregate Canadian Gov/Credit 1-5 year Float Adjusted Bond Index Barclays Global Aggregate Canadian Credit 1-5yr Float Adjusted Bond Index Management Expense Ratio (MER)* Holdings 0.20% 0.22% % 0.17% % 0.17% 206 Morningstar Awards 2013(c). Morningstar, Inc. All Rights Reserved. Awarded to Vanguard Investments Canada Inc. for Morningstar ETF Provider of the Year award and Best Equity ETF award, Canada. *Source: The Vanguard Group, Inc. Holdings based on Vanguard data as of February 28, MERs are as of June 30, 2013 and are based upon actual annualized expenses including waivers and absorptions. MERs without any absorptions or waivers would have been: 0.24% for VAB, 0.18% for VSB, 0.19% for VSC. The Manager expects to continue absorbing or waiving certain fees indefinitely, but may in its discretion, discontinue this practice at any time. 7

8 Disclosures Commissions, management fees and expenses all may be associated with the Vanguard ETFs. This offering is only made by prospectus. Copies are available from Vanguard Investments Canada Inc. at Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; read it before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. Date of First Publication: March 28, The opinions expressed in this presentation are those of the individual representative and do not necessarily reflect the opinions of Vanguard Investments Canada Inc. No implied or express recommendation, offer, or solicitation to buy or sell any ETFs or to adopt any particular investment or portfolio strategy is made in this material. This presentation is not research, investment and/or tax advice and it is not tailored to the needs or circumstances of any individual investor. Information, figures and charts are summarized for illustrative purposes only and are subject to change without notice. Vanguard Investments Canada Inc. does not guarantee the accuracy, completeness, timeliness or reliability of all the information contained in these slides or any results from their use. The Vanguard ETFs are not sponsored, endorsed, sold or promoted by Barclays. Barclays does not make any representation regarding the advisability of Vanguard ETFs or the advisability of investing in securities generally. Barclays' only relationship with Vanguard is the licensing of the Index which is determined, composed and calculated by Barclays without regard to Vanguard or the Vanguard ETFs. Barclays has no obligation to take the needs of Vanguard or the owners of the Vanguard ETFs into consideration in determining, composing or calculating the Index. Barclays has no obligation or liability in connection with administration, marketing or trading of the Vanguard ETFs. Standard & Poor's, S&P 500 and S&P are registered trademarks of Standard & Poor's Financial Services LLC ("S&P") and have been licensed for use by Vanguard. The Vanguard ETFs are not sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P, its affiliates and all of their third-party licensors disclaim any and all warranties and representations, express or implied, including any warranties of merchantability or fitness for a particular purpose or use as to the S&P index data. Vanguard makes no representation regarding the advisability of investing in third-party products that utilize S&P indexes. Morningstar data 2012 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Dividend Achievers" is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, "NASDAQ OMX") and has been licensed for use by The Vanguard Group, Inc. Vanguard ETFs are not sponsored, endorsed, sold, or promoted by NASDAQ OMX and NASDAQ OMX makes no representation regarding the advisability of investing in the ETFs. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD ETFs. 8

9 Disclosures (continued) All rights in the FTSE Canada All Cap Real Estate Capped 25% Index and the FTSE Canada High Dividend Yield Index (the Indexes ) vest in FTSE International Limited ( FTSE ). FTSE is a trademark of London Stock Exchange Group companies and is used by FTSE under license. The Vanguard FTSE Canadian Capped REIT Index ETF and Vanguard FTSE Canadian High Dividend Yield Index ETF and the Vanguard FTSE Canadian High Dividend Yield Index ETF (the Products ) have been developed solely by Vanguard. The Indexes are calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Products and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Indexes or (b )investment in or operation of the Products. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Products or the suitability of the Indexes for the purpose to which they are being put by Vanguard. Other restrictions: Since the purpose of this presentation is to discuss the Canada domiciled Vanguard Funds, neither The Vanguard Group, Inc. (VGI) nor Vanguard Investments Canada Inc. (VIC) is soliciting residents of Ontario, Quebec and Newfoundland and Labrador to invest in the investment funds managed by VGI (the U.S. Funds). It is our policy to consider, accept and provide responses to your unsolicited inquiries for information regarding specific U.S. Funds at the presentation. You are permitted to make unsolicited inquiries if you meet the following terms and conditions: (i) (ii) (iii) (iv) You are a registered dealing representative of a registered dealer; You are asking for information about the U.S. Fund on a basis that is completely unsolicited by VGI, VIC or the U.S. Funds; You will only use information about the U.S. Fund to assist your own general understanding of the U.S. Fund so that you can advise your accredited investor or permitted clients who wish to invest in the U.S. Fund as principal; and You will not use this information to advise any of your non-accredited investor clients to invest in the U.S. Fund. In responding to unsolicited inquiries for information about the U.S. Funds, information provided by VGI or VIC is for informational purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any U.S. security. No part of this presentation may be reproduced, distributed, disseminated or referred to, in whole or in part, in any form, including to any investor, without prior written and express permission by Vanguard Investments Canada Inc. By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by these terms and conditions Vanguard Investments Canada Inc. All rights reserved. 9