Walking through Vanguard Group’s headquarters in Malvern, Pennsylvania is a lesson in naval history.

Paintings of the 18th-century ship that inspired the company’s name jostle with seascapes and a framed letter from legendary British Admiral Horatio Nelson. Even the campus itself conjures tales of derring-do, with buildings swooping along a shallow curve, as if tracing a galleon from stern to bow.

This maritime heritage is taking on new significance as the $4.4 trillion U.S.-based firm looks overseas for growth amid the biggest leadership shakeup in almost a decade. Vanguard is pushing into Europe and Asia-Pacific, but it’s de-emphasizing the index-tracking products that brought in about 75 percent of its assets in favor of an armada of actively managed funds, which Europeans tend to prefer. The offerings will still have Vanguard’s signature emphasis on low fees, with some undercutting European rivals by more than half.

“We’re trying to catch up with what we’ve already done on the indexing side, to be able to offer low-cost, high-quality, active products to investors on a more global basis,” said Greg Davis, the 46-year-old incoming chief investment officer, during an interview at the company’s offices.

About $275 billion of the company’s assets lie overseas, yet this equates to less than 10 percent of Vanguard’s overall bulk. And while Vanguard is a household name in the U.S., it’s a relative newbie compared with Europe’s asset-management brands.

Global Growth

Vanguard plans to change all that. The company began offering new mutual funds in Europe for the first time in nine years last May and listed four active exchange-traded funds a few months prior. It has started similar ETFs in Canada, and plans to set up its first active fixed-income fund in Europe within six months, according to Davis.

Active funds are “pretty ubiquitous” in Europe, where that style of management resonates, according to Rich Powers, head of ETF product management. These types of funds house about 86 percent of assets in the region versus about 65 percent in the U.S., where index-tracking ETFs are more established. The active funds typically cost more, according to data from Morningstar, but that hasn’t yet been a deal-breaker for investors on the continent.

“In the last five years, all the headlines are about the onslaught of passive, but we have more or less doubled our assets under management in that time,” said  Maarten Slendebroek, chief executive officer at Jupiter Fund Management Plc, which manages about $61 billion. “If you have really strong performance and you outperform, then customers will be happy to pay.”

Vanguard plans to test that thesis. Investors pay an average of 1.02 percent in fees for star managers on euro-based funds, Morningstar’s data show. Vanguard is charging 0.22 percent for its active ETFs, and 0.6 percent for three of its new mutual funds. The company has previously said high costs was one of the main reasons why most actively managed funds underperformed their chosen benchmarks in the past 15 years.

First « 1 2 3 » Next