28/05/2010
Investors focus on low-cost products
In the ten years to 31 December 2009, a percentage of all net subscriptions in the United States recorded my Morningstar ranging from 55% (for active equities management) and 93% (for passive equities management) went to the least expensive quarter of all funds, according to a Vanguard study (“Costs Matter: Are Fund Investors Voting With Their Feet?»). Francis Kinniry, Jr., principal at Vanguard Investment Strategy Group, explains that the trend is partly due to the popularity and rising availability of ETF funds, and a rising number of low-cost actively-managed funds. Meanwhile, it is apparent that this preference is partly attributable to the growing influence of independent financial advisers and promoters of corporate retirement savings plans, as 90% of assets are invested via intermediaries who are extending their low-cost offerings. Kinniry points out that the volatile environment on financial markets has led investors to the realisation, firstly, that costs are an important element, and secondly, that they are a factor in the investment equation that can be brought under control. In addition to this, online information is more readily available, and transparency is increasing, while financial media are increasingly critical of fee levels.
