Vanguard to close most of its institutional business in Australia; focus on retail

FILE PHOTO: People are seen at a booth of Vanguard Group at a fair during the INCLUSION fintech conference in Shanghai, China September 24, 2020. REUTERS/Cheng Leng

SYDNEY (Reuters) – Vanguard Group Inc said on Wednesday it will close most of its business managing money for institutional investors and large pension funds in Australia and New Zealand, and focus on serving retail clients.

The U.S. investments giant, which has roughly A$164 billion ($118 billion) in assets under management in Australia, will stop offering customised products called segregated mandated accounts (SMA) to large institutional investors.

The exit comes as Australia’s pension funds, which make up the world’s third-largest pool of pension assets, have moved towards managing a larger portion of their investments internally to lower costs. This has intensified competition for investment mandates and forced the closures of several funds.

The Pennsylvania-headquartered manager will continue to offer some investment products that

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Vanguard Information Technology ETF: Better Risk-Reward Amid Volatility (NYSEARCA:VGT)

The Vanguard Information Technology ETF (VGT) closely tracks the much more famous Invesco QQQ ETF (QQQ) with the latter having 200,000 followers on Seeking Alpha.

Figure 1: Performance of VGT and QQQ

ChartData by YCharts

Now, both VGT and QQQ are dominated by big companies in the technology sector such as Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) which form both ETFs’ largest two holdings respectively.

On the other hand, these two ETFs differ widely as to the other constituents with QQQ being significantly exposed to GAF meaning Google (NASDAQ: GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB).

Figure 2: Holdings of the QQQ and VGT

Source: etfdb.com

Behind these differences in terms of underlying stocks, VGT has some key strengths when considering risks, profitability and potential growth which means a better score in the Risk-Reward indicator.

VGT’s strength

First, VGT’s exposure to Microsoft at 17% compared to

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Vanguard Information Technology ETF: A Great Low-Cost Compounder (NYSEARCA:VGT)

Introduction

The Vanguard Technology ETF (VGT) is a very popular vanguard technology fund that tracks the market-cap-weighted MSCI US Investable Market Information Technology 25/50 Index. The ETF holds information technology companies and has a very strong performance track record. The fund charges a very low fee for a tech-based ETF at just 0.10%. The ETF has over $35 billion in assets under management and holds over 300 positions, making it substantially more diversified than most competing technology ETFs.

Source: Unsplash

Portfolio Construction and Holdings

VGT is a technology ETF, so it’s no surprise that the Software & IT Services sector makes up around 51% of the fund. Of course, other technology sectors like computers & phones, and semiconductors also dominate the fund coming in at around a 40% weighting. Finally, the fund holds a few companies from multiple sectors like communications, electronics, and even some machinery & equipment, renewables, and

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