Bloomberg News

Vanguard Opens Canadian Unit to Help Drive Expansion Abroad

June 06, 2011

June 6 (Bloomberg) -- Vanguard Group Inc., the world’s biggest mutual-fund company, is opening a unit in Canada, continuing an expansion of its low-cost, passive investment offerings outside the U.S.

Atul Tiwari, 46, formerly of the Bank of Montreal, will head Vanguard Investments Canada in Toronto, the company said today in a statement. The Valley Forge, Pennsylvania-based firm declined to say what products it plans for the Canadian market until it files a preliminary prospectus with regulators.

Mutual funds sold in Canada had the highest management fees among 18 countries, according to a 2006 study by Harvard Business School’s Peter Tufano, Ajay Khorana at the Georgia Institute of Technology and Henri Servaes at the London Business School. Total expenses for the average equity fund were 1.71 percent in the U.S. and 2.87 percent in Canada, according to the study.

“If you look at the costs embedded into funds, we think there is sufficient room for cost competition here,” Tawari said in a telephone interview.

Fund-research company Morningstar Inc. has referred to the “Vanguard effect” to describe how the firm’s 2009 entry into the U.K. funds market caused other competitors to lower their fees.

Tawari was responsible for legal and compliance issues at Bank of Montreal’s BMO Financial Group in Europe and Asia. He was also formerly chief executive officer of Hartford, Connecticut-based Harris Insight Funds.

Mutual funds registered in Canada manage about $697 billion, according to data compiled by Bloomberg. Canadian exchange-traded funds, or ETFs, held $42.8 billion as of March 31, according to BlackRock Inc.

--Editors: Steven Crabill, Christian Baumgaertel

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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