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fee-gouging funds sparked vanguard exit

Originally published on Australian Financial Review on 6 October 2020

[Adapted from Australian Financial Review ]

Vanguard's retreat from managing money on behalf of competitor superannuation funds was partly inspired by the $9 trillion fund manager's desire to distance itself from the high fees and poor performance of clients. ...

But investment consultant Robert Talevski of Activus Investment Advisors said there may have been another motivation for Vanguard's about-turn on institutional client work.

"They probably were not getting enough traction," he said.

"This part of the market is very price competitive, with a lot of the market participants fighting over one or two basis point gigs. With the larger institutional super funds bringing more investment management internally, this has only made competition in this sector ever fiercer."

Vanguard would be better off trying to compete with rather than service the low cost index options offered by super funds like Australian Super, Rest and Hostplus, Mr Talevski said.

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