While other asset management firms are coming out with esoteric exchange-traded fund products “for products’ sake,” resulting in rampant “product proliferation,” Vanguard plans a more cautious approach, Chairman John Brennan told Reuters.
At present, the firm is concentrating on launching fixed income ETFs. That could branch out into other areas, Brennan said, but in every case, Vanguard’s ETF offering will be designed for long-term investors.
“There are a lot of products for products’ sake out there in the ETF space,” Brennan said. “We are totally committed, but we won’t be a product proliferater. We think our product line looks very strong today for the way we think ETFs should be used.”
Vanguard currently has about $25 billion in ETF assets, $8.6 billion netted in 2006 and $2.6 billion so far this year.
Vanguard is concentrating on selling its ETFs through broker/dealers and banks, as their interest in the product is heightened, said Martha Papariello, head of Vanguard’s financial adviser business.
Gus Sauter, Vanguard’s managing director and chief investment officer, also said that the firm plans to quadruple its actively managed equity funds over the next decade. In the past five years, assets in such funds have multiplied by five times to $25 billion.
“I would expect that side of our department to grow pretty dramatically over the next five to 10 years,” Sauter said. “I would expect it to be well over $100 billion, perhaps $200 billion.”
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