Magellan Financial Group Ltd (ASX: MFG) shares jumped 1.2% higher on Thursday as the wealth manager announced plans to offer exchange-traded funds (ETFs).
Why Magellan shares jumped higher
According to an article in the Australian Financial Review (AFR), Magellan is looking to launch a series of low-cost investments.
Magellan is reportedly planning to launch an MFG Core series of 3 listed international equity funds offering low-cost strategies.
The management fees are set to be just 50 basis points (bps) and no performance fees.
Now, I think this is big news for Magellan shares. Magellan has been a wildly successful active fund manager for decades.
However, its offering does come at a hefty cost, which has turned off some would-be investors.
However, Magellan moving into the ETF space could be a game-changer.
What other ETF options are out there?
In the domestic space, both Vanguard Australian Shares Index ETF (ASX: VAS) and BetaShares Australia 200 ETF (ASX: A200) are popular choices.
The Vanguard fund charges just 10 bps per year while the BetaShares ETF has a fee of just 7 bps p.a.
Internationally, there are some other good options. Magellan shares provide exposure to international share management indirectly through its performance.
However, in terms of ETFs, the Vanguard MSCI Index International Shares ETF (ASX: VGS) is a popular choice.
The Vanguard ETF aims to track the return of the MSCI World ex-Australia, tracking approximately 1,500 large-cap and mid-cap companies.
There’s also the iShares Global 100 (AUD Hedged) ETF (ASX: IRU).
This iShares ETF aims to track the S&P Global 100 Hedged AUD Index with 100 multinational, blue-chip companies.
Foolish takeaway
I think this is good news for Magellan shares. More passive investment options open up new avenues for the Aussie fund manager.
However, it does risk cannibalising some of its current offerings. Just how well Magellan walks that tightrope will be the key to success in the years to come.
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More reading
- ASX 200 drifts 0.1% lower, CBA reports solid FY20 result
- Why the Magellan share price might be a post-earnings buy today
- Is BetaShares Australia 200 ETF the best ASX ETF?
- Earnings season: Magellan share price climbs higher after positive annual report
- Why Aurizon, Cochlear, Magellan, & Westpac shares are pushing higher
Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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