Vanguard, the fund manager with US$1.9 trillion under management globally, welcomes superannuation reforms proposed by Jeremy Cooper, saying it will improve transparency and lower costs.

“Superannuation is fantastic for Australians but there has not been a lot of price competition even though there is about $1.4 trillion in the system,” says Robin Bowerman, head of corporate affairs and market development at Vanguard Australia.

“If fees can be lowered that will be a terrific thing for Australians,” he says.

About half of Vanguard’s funds globally are indexed. About half are actively managed. All of the $62 billion the company manages in Australia is indexed.

Vanguard’s fees have dropped from about 80 basis points per U.S. fund 30 years ago to about 25 basis points per U.S. fund today, says Bowerman.

“You cannot control returns but you can control costs,” he says. “It is a misnomer that lower cost products such as indexing have lower returns. Our experience is that when you lower costs you give investors better returns.”

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