Vanguard To Target Offshore Mutual Funds Through Bermuda

by Carla Johnson, Investors Offshore.com

10 July 2001

The Vanguard Group recently announced that it would be targeting sales of its offshore mutual funds through Bermuda because of the level of interest in their funds there, and the magnitude of the existing investment business.

Vanguard partner Shelley Unger said last week that the Group would be primarily targeting sales of its funds through financial intermediaries. 'There is not much direct business outside of the US,' she explained. 'Changing investor habits is more difficult than going direct.' Ms Unger also said that she believes that reaching clients through intermediaries, or entities such as pension plans would be more efficient than building an elaborate and costly offshore sales division.

Ms Unger and the Group's Sales Executive For International Operations, Thomas Schwartzenruber, were in Bermuda last week as part of a drive to develop their business internationally, and in an interview with the Bermuda Sun, Mr Schwartzenruber elaborated on the benefits of the offshore structure of the Vanguard global approach, pointing to the tax efficient nature of the funds, combined with the minimal reporting and US estate tax and diversification requirements as key advantages.

Vanguard launched its first offshore fund in 1998, and since then, efficient mutual funds that closely track the index have become their trademark. As of the end of March, they had over $10 billion in non-US source assets under management. The Group is currently active in 19 countries.

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