Exchange-Traded Funds at Vanguard (A) Harvard Case Solution & Analysis

The management of the company, under the leadership of Chief Executive Officer John Brennan, is looking to introduce exchange traded funds (ETFs) in 2000. Exchange trade Funds, first launced in the 1990s, combined attributes of of conventional mutual funds and closed-end funds. U.S. ETF industry reached thirty six billion in assets under management, is growing rapidly in the last few years. Because ETFs are index tracking products exclusively, Vanguard, the largest index mutual fund company, had some experience in the management of potential ETFs. However, to enter the market will be a challenge for Vanguard. Vanguard was the philosophy of maintaining a low turnover of investments, while ETFs including short-term trading. The company also needs to develop a distribution network for ETFs. Finally, because the Vanguard mutual funds owned by investors, management pondered over the dilemma whether existing shareholders will benefit from the product launch ETF. "Hide
by Robert C. Pozen, Stephen Vickers Source: Harvard Business School 12 pages. Publication Date: June 10, 2011. Prod. #: 311134-PDF-ENG

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