Vanguard to launch ETFs

Currently, Canadian investors looking for an ETF offering either U.S. aggregate bond exposure or international aggregate bond exposure would need to convert their cash to USD and buy a U.S.-listed ETF.

Vanguard aims to fill these gaps and has filed to launch the Vanguard US Aggregate Bond Index ETF (CADhedged) and the Vanguard Global ex- US Aggregate Bond Index ETF (CADhedged).

Read: Price setting of ETFs

Vanguard currently offers both these exposures in the U.S. with BND launched April 10, 2007 with $17 billion in assets at a 10 bps expense ratio for U.S. aggregate bond exposure, and the recently launched BNDX with $30 million in assets, a 20 bps expense ratio offering international bond exposure. Vanguard may elect to wrap these U.S. ETFs into their Canadian versions.

Canadian equity and U.S. dividend ETFs

Vanguard will complement its large cap ETF with a more broad market ETF with the newly filed Vanguard FTSE Canada All Cap Index ETF.

Read: ETF wrinkles

First Asset has a U.S. dividend ETF that tracks a quantitative Morningstar Index ( UXM), and First Trust just came to Canada with a U.S. dividend ETF that includes an active covered call overlay ( FUD). Vanguard had a product gap here and is planning to fill it with the Vanguard U.S. Dividend Appreciation Index ETFs in both CAD and CAD-hedged versions.

Read: Consider defensive ETF portfolios

Currency options for U.S. and international exposures

VUS, Vanguard US Total Market Index ETF (CADhedged) will be complemented with an unhedged version, the Vanguard US Total Market Index ETF. Vanguard also offers a CAD-hedged international ETF in Canada ( VEF) and plans to launch an unhedged version with the Vanguard FTSE Developed ex North America index ETF.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.