Vanguard was relatively late to the ETF business in 2001 and chief executive Bill McNabb said the company’s entry was based on a shift in the U.S. advisor market to a fee-based from commission-based model.
“That was when we began to realize that ETFs could be phenomenally helpful fundamental holdings for advisers as they started to build low-cost, highly diversified portfolios for their clients,” McNabb said in a recent Financial Times article.
ETFs represented 45.2% of Vanguard’s net inflows in 2011. McNabb said ETFs would become “a global phenomenon” as more countries moved away from commission-based sales.
Vanguard is getting a boost from interest in international and emerging market ETFs, and low expense ratios, Ignites reported Thursday.
“That coupled with Vanguard’s brand name and the resources they are putting into reaching out to advisors all adds up to a growing ETF franchise,” Todd Rosenbluth, ETF analyst at S&P Capital IQ, said in the article.