Vanguard Investments Hong Kong Limited

Vanguard ETFs: A low cost way to investment success

Vanguard: The world’s largest mutual fund company and the third largest ETF provider

Vanguard may be new to Hong Kong but our parent company, The Vanguard Group, Inc., was founded in the United States in 1975 with a commitment to serving our clients' interests exclusively. Over the years, we have held firm to that commitment and have grown to become the world’s largest mutual fund company^１ and the third largest ETF provider^２.

Why have clients trusted Vanguard with more than USD 2.93 trillion^３? The answer lies in our core mission: to take a stand for all investors, to treat them fairly and to give them the best chance for investment success.

We understand investors are more concerned about ‘returns’, however there are many factors affecting performance. Cost is one of the key factors that can be controlled. Every dollar you pay in fees directly reduces your net return. All else being equal, lower-cost investments provide greater net returns than higher-cost investments. That advantage becomes more pronounced over time.

At Vanguard, offering low-cost investments isn't a pricing strategy; it's how we do business. Over the years, we keep lowering investment costs for investors. By year-end 2013, our US funds' average expense ratio was 0.19% – less than one-fifth of the US industry average⁴.

Established in 2011, Vanguard Investments Hong Kong Limited has kept with our parent company’s client focus by offering low-cost investment options for investors. For example, we launched the Vanguard FTSE Asia ex Japan Index ETF (2805) in May 2013, with a total expense ratio (TER) of just 0.38%. In June 2014, we have launched three ETFs including Vanguard FTSE Asia ex Japan High Dividend Yield Index ETF (3085), Vanguard FTSE Developed Europe Index ETF (3101) and Vanguard FTSE Japan Index ETF (3126). The average TER of the four ETFs is just 0.33% annually, compared with the average TER of 0.73% for all ETFs listed in Hong Kong⁵. Vanguard's low costs mean investors keep more of their returns – a benefit that compounds over time.

Source:

Global Total Net Assets of Mutual Funds (including Long-Term and Money Market Funds), Morningstar, as of 30 June 2014.
ETFGI, as of 30 June 2014.
Vanguard, as of 30 June 2014.
Vanguard, as of 31 December 2013.
Vanguard calculations using data from Morningstar as at 15 May 2014.

The contents of this document and any attachments/links contained in this document are for general information only and are not advice. The information does not take into account your specific investment objectives, financial situation and individual needs and is not designed as a substitute for professional advice. You should seek independent professional advice regarding the suitability of an investment product, taking into account your specific investment objectives, financial situation and individual needs before making an investment.

The contents of this document and any attachments/links contained in this document have been prepared in good faith. The Vanguard Group, Inc., and all of its subsidiaries and affiliates (collectively, the “Vanguard Entities”) accept no liability for any errors or omissions. Please note that the information may also have become outdated since its publication. The Vanguard Entities make no representation that such information is accurate, reliable or complete. In particular, any information sourced from third parties is not necessarily endorsed by the Vanguard Entities, and the Vanguard Entities have not checked the accuracy or completeness of such third party information.

No part of this document or any attachments/links contained in this document may be reproduced in any form, or referred to in any other publication, without express written consent from the Vanguard Entities. Any attachments and any information in the links contained in this document may not be detached from this document and/or be separately made available for distribution.

The Vanguard FTSE Asia ex Japan Index ETF invests in securities markets that are considered to be emerging markets which involve a greater risk of loss than investing in more developed markets.

The Vanguard FTSE Asia ex Japan High Dividend Yield Index ETF invests in securities markets that are considered to be emerging markets which involve a greater risk of loss than investing in more developed markets. It also invests in high dividend yield securities which may offer a higher rate of dividend yield, but they are subject to risks that the dividend could be reduced or abolished, or the risks that the value of the securities could decline or have lower-than average potential for price appreciation.

The Vanguard FTSE Japan Index ETF concentrates its investment in the Japanese market which may involve a higher level of risks compared to investing in a more diversified portfolio/ strategy and a greater risk of loss than investing in other markets and may result in a higher risk of loss to the fund.

The Vanguard FTSE Developed Europe Index ETF invests in European securities markets which involve a greater risk of loss than investing in other markets and may result in a higher risk of loss to the ETF.

This document is being made available in Hong Kong by Vanguard Investments Hong Kong Limited (CE No.:AYT820), a Hong Kong company licensed with the Securities and Futures Commission ("SFC") in Hong Kong. Investment involves risks, including the loss of principal. Investors are advised to consider their own investment objectives and circumstances in determining the suitability of an investment in the ETFs. If you are in any doubt, you should seek professional advice. Investors should refer to the ETF prospectus for further details, including product features, risk factors and restrictions on owning and holding the ETFs. Investors should not base investment decisions on this document alone. Further details of the ETFs can be found at www.vanguard.com.hk. The ETFs are traded on the HKEx at market price, which may be different from their net asset value. Past performance is not an indication of future performance. The contents of this document have not been reviewed by the SFC and SFC authorisation is not an official recommendation of the ETFs. This document does not constitute an offer, an invitation to offer or a recommendation to enter into any investment products.

ETFs List

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