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Vanguard lures BlackRock's ETF guru as rivalry heats up

by Emma Dunkley on Jan 07, 2013 at 13:31

Vanguard lures BlackRock's ETF guru as rivalry heats up

Vanguard Asset Management has hired Axel Lomholt to head its Europe product development management arm, helping to build out the firm’s passive product range and exchange traded fund (ETF) capital markets team.

The hire marks the second time Vanguard UK has recruited from iShares, its main ETF rival, having appointed Slawomir Rzeszotko last year to head up its capital markets activities. 

It will also further stoke the competition between the two physical ETF providers and could see the price-war currently being waged in the US come over to Europe.

‘Axel will be a great advocate for low-cost investing as investors increasingly embrace high quality, transparent and low-cost funds at the core of their portfolios,’ said Vanguard managing director Tom Rampulla, who Lomholt will report to from his London base.

Lomholt will bring to Vanguard a wealth of ETF experience, as during his time at iShares he not only helped establish the broader index business but was one of the key architects behind its range of high yield ETFs. 

Competition

Vanguard currently offers a broad range of equity and fixed income index funds to investors as well as target-weighted multi-asset portfolios, and in recent month it has looked at ways of getting an edge in the ETF space with the launch of its first suite of European-domiciled ETFs, which have since garnered assets of roughly £170 million.

Price is another area it is watching closely, however the ETF cost competition in the US has yet to become embedded in Europe.  Although Vanguard’s competitively low pricing has helped spur BlackRock to lower its fund fees in the US, BlackRock has not cut costs in Europe or the UK.

With Vanguard’s S&P 500 ETF having a total expense ratio (TER) of 0.09% versus BlackRock’s TER of 0.40%, it could only be a matter of time before the leading ETF provider comes under pressure to cut its fees.

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