Vanguard gears up for 2022 superannuation launch

Vanguard is set to launch its own superannuation offering in 2022. The American investment giant is famous for its low-cost investment products, so how could its super offering stack up in Australia?

Vanguard first announced plans to enter Australia’s $3.4 trillion super sector a few years ago. Now, Vanguard is finally gearing up to launch. Although no specific date has been set yet, Vanguard said it is “working towards a 2022 launch” in an email sent to Aussies keen to sign-up for the product. 

This launch could make Vanguard yet another big fish in a pool increasingly populated by mega super funds, following the upcoming merger between QSuper and Sunsuper. 

For those unfamiliar with Vanguard, here’s an introduction to the international company and what we know so far about it’s upcoming local super offering.

Who is Vanguard?

The Vanguard Group was founded in 1975 by the late John C. Bogle, who went by the name Jack. Known as the ‘father of indexing’, Bogle created the first retail index fund for individual investors in 1976. By bringing low-fee, passive index funds to the masses, Mr Bogle is widely credited with revolutionising the way people invest their money. 

Vanguard says it is now one of the world’s largest investment management companies, offering a range of low-cost mutual funds and exchange traded funds (ETFs). As of 31 January, 2021, Vanguard has $7.2 trillion in global assets under management and more than 30 million investors across 170 countries. 

One aspect of Vanguard that sets it apart from other investment managers is its mutual ownership structure. It is owned by Vanguard’s US funds and ETFs, which are in turn owned by their investors. According to Vanguard, its scale and how it does business helps it return profits to investors in the form of lower costs. 

What will Vanguard superannuation offer?

At this stage we don’t know much about Vanguard’s new super fund, except that it’s expected to be low-cost. Vanguard’s email noted that “low fees are high on the agenda” and it will continue its commitment to low-cost investing. 

Vanguard has also said it aims to provide a super product that will be simple and transparent. 

“We’re working on a seamless and transparent super experience that’s easy to get your head around,” Vanguard said. “Where everything from the fee structure to your portfolio’s performance is kept simple.”

How could Vanguard impact the Australian super sector?

Steve Mickenbecker, Canstar’s Group Executive of Financial Services, said he expected Vanguard’s superannuation offering would introduce another low-cost option for Australian consumers. 

“If Vanguard’s superannuation offers the same kind of cost efficiencies as its existing indexed investment business, it could position Vanguard right at the bottom end of the cost scale for superannuation in Australia,” Mr Mickenbecker said. 

He said Vanguard may also be well-placed to win over those who are thinking of switching funds, with many Australians switching from retail funds following the Royal Commission. 

“Most of those switching have moved to industry funds, some of which have low-cost index offerings available to their customers,” said Mr Mickenbecker. 

“However, with a new offering that’s likely to be very keenly priced coming onto the market, Vanguard would be hoping to win a share of this.”

Main image source: Casimiro PT (Shutterstock)