Global X challenges Vanguard with low-cost Aussie equity ETF
Global X has come out fighting in the race to the bottom for ETF fees with an Australian equity ETF offering fees of just 0.04 per cent per annum.
The Global X Australia 300 ETF (A300) will provide investors with exposure to the 300 largest Australian companies on the ASX, tracking the performance via the FTSE Australia 300 Index.
The addition of 100 extra companies to the investment universe will capture more small- and mid-cap stocks, it said.
Flagging the launch last month, Global X said the launch of the low-cost product was an opportunity to capitalise on Australian’s growing appetite for ETFs, their preference for domestic offerings, and the safe haven of Australia against a turbulent US market.
Crucially, with management fees of 0.04 per cent per annum, Global X said these are almost half that of rival Vanguard’s Australian Shares Index (VAS) which charges 0.07 per cent per annum and also tracks the ASX 300.
The Vanguard fund was launched in 2009 and is the largest ETF available in Australia at more than $20 billion in assets under management.
InvestorDaily, Money Management’s sister title, previously flagged in June that Global X was seeking to launch more “vanilla” strategies that meet investor demand for core ETF holdings and complement its existing product line-up.
Money Management recently covered how fees are the differentiating factor when it comes to choosing an ETF, with Morningstar data finding the average asset weighted fee for an ETF being 97 bps for an active one and 23 bps for a passive one. Global X and EY data also found almost two-thirds of ETF flows are going into index ETF which have a fee of less than 25 bps.
Global X senior product and investment strategist, Marc Jocum, said: “The launch reflects Global X’s ambition to be part of every Australian investor’s portfolio and deliver accessible solutions that suit long-term wealth building.
“While our focus remains on investment innovation, A300 provides a core offering, enabling investors to access a diverse range of Australian companies, as well as to reap dividend income, through a single trade on the ASX.
“As the ETF industry pushes towards $300 billion in assets, we’re focused on growing with the market – combining best-in-class research, thematic leadership, and now core coverage of the Australian share market.”
Global X now has more than $11 billion in assets under management and is targeting $12 billion by the end of 2025.
AUTHOR
Shy-Ann Arkinstall
Recommended for you
Funds under management at Pinnacle Investment Management are approaching $180 billion, helped by a substantial jump in FUM from its overseas affiliates.
Warakirri Asset Management has partnered with US-based investment manager ClariVest to give Australian retail and wholesale investors access to the firm’s global small companies strategy.
Betashares has expanded its equity range, launching its latest Australian equity ETF and reducing the management fee on its existing global dividend ETF.
With active ETFs becoming the latest choice as fund managers target the retail audience, their high fees may be a detractor as research finds investors are shunning those priced any higher than 50 bps.
