Fund action - Friday, June 27, 2008

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Vanguard Pushes ETFs

Vanguard Group is ramping up its efforts to reach advisors with its exchange-traded funds by expanding its wholesaling force.

Wholesaler Bill Arnold said Vanguard is allocating more money and staffers to the advisor channel because ETFs are increasingly profitable for Vanguard, and the firm feels it can dominate the market with its low cost. The average Vanguard ETF carries an expense ratio of 16 basis points while the industry average is 53 bps, according to Lipper.

Vanguard plans to have 70 wholesalers in the advisor channel by year’s end—there are now about 60, said Arnold. He added that when Vanguard launched its first ETF in 2003, advisor sales were handled by one wholesaler. Vanguard does not sell ETFs directly to investors and has always made them available through RIAs, broker/dealers and its proprietary brokerage.

Arnold did not know how much the push will cost and referred questions to Martha Pappariello, head of the advisor sales group. Pappariello did not return calls.

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