Vanguard Australia will lower fees for its diversified wholesale funds and revise the asset allocation strategy for the full suite of diversified products from July.
The company most recently updated its diversified funds strategic asset allocations in 2013.
From 1 July, management expense ratios (MERs) would be reduced to 0.28 per cent for the following funds: Vanguard Conservative Index Fund (from 0.33 per cent), Vanguard Balanced Index Fund (from 0.34 per cent), Vanguard Growth Index Fund (from 0.36 per cent), Vanguard High Growth Index Fund (from 0.37 per cent) and Vanguard Diversified Bond Index Fund (from 0.34 per cent).
With the MERs lowered across its five diversified wholesale funds and once these reductions would take effect, Vanguard said it would expect to have lower MERs on 10 funds in 2017 alone.
Vanguard stressed that the multi-asset funds gave investors the option of building their portfolios based on their risk appetite, while its Diversified Bond Index Fund was more suited to investors focused on generating steady income.
Additionally, these funds were often used by self-managed super fund (SMSF) investors as well as the financial advisers.
Vanguard’s head of investment strategy group, Asia Pacific, Jeffrey Johnson said that much of the changes for diversified funds were aimed at addressing concentration risk.
Also, the firm would lower its exposure to Australian shares and real estate investment trusts (REITs) and increase exposure to global shares.
“The multi-asset funds will also have a portion of currency-hedged global shares, which will help us manage currency risk over short-to-medium timeframes,” he said.
“This round of asset allocation adjustments will particularly help us manage concentration and currency risk across our multi-asset funds.
“Across the entire suite of funds, including the Vanguard Diversified Bond Index Fund, we will have a greater allocation to global bonds, which reflects the concentration of the Australian fixed income market.”
